No reversal of economic reforms, will reverse rupee slide: Prime Minister Manmohan Singh

August 30, 2013

Prime_Minister

New Delhi, Aug 30: Prime Minister Manmohan Singh on Friday ruled out reversal of reforms or resorting to capital controls to rescue the sliding rupee, which he said fell on account of domestic as well as global factors.

Making a statement on the state of the economy in Parliament amid concerns over rapid depreciation of rupee, Singh said the country has to be ready for short-term shocks but the government will ensure that the fundamentals of economy remain strong.

"We are faced with challenges but we have the capacity to deal with them,", he said, while seeking support of all political parties in this situation.

Breaking his silence on the decline of rupee, he said there "may be short term shocks to our economy and we need to face them. That is the reality of the globalised economy, whose benefits we have reaped".

There is no question of reversing the policies just because there is some turbulence in capital and currency markets, he said, adding the "sudden decline in exchange rate is certainly a shock, but we will address this through other measures, not through capital controls or by reversing reforms".

Not satisfied with the Prime Minister's statement, the Opposition parties including BJP, AIADMK, Left and SAD later staged a walk-out in the Lok Sabha.

Pitching for more reforms, the Prime Minister said easy reforms of the past have been done but the difficult ones remain.

"We have the more difficult reforms to do such as reduction of subsidies, insurance and pension sector reforms, eliminating bureaucratic red tape and implementing Goods and Services Tax," he said.

"These are not low hanging fruit and need political consensus... We need to forge consensus on such vital issues. I urge political parties to work towards this end and to join in the government's efforts to put the economy back on the path of stable and sustainable growth," Singh said.

The Prime Minister attributed the sudden and sharp depreciation in rupee to various domestic and global factors like high current account deficit (CAD), US Federal Reserve plans to taper quantitative easing measures and tensions in Syria.

"... the rupee has been especially hit because of our large CAD and some other domestic factors. We intend to act to reduce the CAD and improve the economy," Singh said.

The deterioration in CAD, he said, has been mainly on account of huge import of gold, higher cost of crude oil imports and recently of coal.

Moreover, Singh said that exports have been further hit by collapse in iron ore shipments making "our CAD unsustainably large".

"Clearly we need to reduce our appetite for gold, economisz the use of petroleum products and take steps to increase our exports," the Prime Minister said, adding the government will take all possible steps to bring down CAD below USD 70 billion this fiscal.

The Prime Minister said the medium term objective of the government will be to reduce CAD to 2.5 per cent of GDP and the government will make all efforts to maintain "a macro economic framework friendly to foreign capital inflows to enable orderly financing of the current account deficit".

"... it is important to recognise that the fundamentals of the Indian economy continue to be strong," Singh said.

Emphasising that the country's overall public-debt to GDP ratio has been declining, he said India's external debt is only 21.2 per cent of GDP while short-term stands at 5.2 per cent.

"Our forex reserves stand at USD 278 billion, and are more than sufficient to meet India's external financing requirements," he said.

The rupee depreciation, he said, can be good for economy as it will help to increase the export competitiveness and discourage imports.

The foreign exchange markets, he regretted, have a notorious history of overshooting.

"Unfortunately, this is what is happening not only in relation to the rupee but also other currencies," Singh said, stressing that the value of a currency is determined by fundamental of the economy and the government is taking steps to improve them.

Referring to economic prospects, Singh said that even though growth has slowed down in recent quarters, it is expected to pick up.

"I expect growth in the first quarter of 2013-14 to be relatively flat, but as the effects of the good monsoon kick in, I expect it to pick up," he said.

"All in all, the macro-stabilisation process which should support the value of the rupee is under way. I expect that as the fruits of our efforts materialise, currency markets will recover," he said.

Regarding fiscal deficit, the Prime Minister said the government will do whatever is necessary to contain the fiscal deficit to be 4.8 per cent this year.

"The most growth friendly way to contain the deficit is to spend carefully, especially on subsidies that do not reach the poor, and we will take effective steps to that end," he said.

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News Network
June 27,2020

Hyderabad, Jun 27: Ahead nurse working with a state-run hospital here died on Friday while undergoing treatment for COVID-19, a hospital official said.

The nurse, who was due to retire this month-end, tested positive about 10 days ago, he said.

The woman, who had been on medical leave for about 20 days, is suspected to have contracted the virus when she attended a private function in a neighbouring district, he said.

She was treated at the hospital for two days after she was found positive for COVID-19.

However, she was shifted to another government hospital as the symptoms continued unabated and sugar levels were high, he said.

The woman, who had comorbidities like diabetes and hypertension, died today.

Meanwhile, about 20 healthcare personnel, including doctors and paramedical staff, have so far tested positive for COVID-19 at the state-run Gandhi hospital, according to a hospital official.

He also said that there are around 50 patients whose family members have not come forward to take them home though the patients can be in home quarantine.

Family members have cited reasons such as residents not allowing a positive patient to return to the villages and presence of children at residences, for not taking them home, he added.

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Agencies
August 6,2020

Mumbai, Aug 6: Former Reserve Bank of India governor Raghuram Rajan said on Thursday that overly focusing on what sovereign rating agencies think can take one's eyes off what needs to be done for the economy.

"It is also important to convince both domestic and international investors that after the crisis associated with the pandemic is over, we will return to fiscal responsibility over the medium term, and the government should do more to convince them of that," Rajan told the Global Markets Forum.

India was placed under one of the strictest lockdowns in the world in late March for more than two months to stem the spread of the coronavirus, but cases have continued to rise steadily since the government eased restrictions in June, stymieing hopes of an economic recovery.

The government has announced several initiatives to help the poor and small- and medium-size businesses, but actual cash outgo from the government's measures has been estimated at just about 1% of GDP.

Several attribute the fiscal prudence to fear of a downgrade after Moody's cut India's rating and outlook in early June followed closely by a change in outlook from Fitch.

The central bank on its part too has reduced the key lending rate by 115 basis points on top of the 135 bps last year and is widely expected to cut rates by another 25 bps later on Thursday.

"The RBI and government have certainly been cooperating, but it seems like it is elsewhere, the ball is in the government's court to do more," Rajan said.

He said the RBI needs to focus on whether credit is reaching the stressed areas of the economy and also if the viable firms were able to access credit and not the unviable ones.

"And I think that's where it has to focus its attentions, because resources, as you well know, are limited in India today."

Recently analysts, however, have cited the growing possibility the RBI may prefer to pause and cut rates only at its October meeting.

Government officials too have suggested the possibility of any more fiscal stimulus being announced, would only come in the second half of the fiscal year, once a recovery has taken root and coronavirus cases have peaked.

"What India should focus on at this point is protecting its economic capabilities, so that when it has dealt with the virus it can go resume activity in a reasonable way. That should be the focus," Rajan said.

"And if it does that, there is no reason why the rating agencies will not see that as an appropriate policy".

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News Network
April 24,2020

New Delhi, Apr 24: The trajectory of COVID-19 cases could have plateaued and might even fall for some weeks after the lockdown is lifted but India is likely to see a second wave in late July or August with a surge in the number of cases during the monsoon, say scientists.

The timing of the peak will depend on how India is able to control physical distancing and on the level of infection spreads after restrictions are relaxed, they said.

It looks apparent that the trajectory of daily new cases has reached a plateau and eventually it will take a downward fall, maybe for some weeks or even months, Samit Bhattacharya, associate professor at the Department of Mathematics, Shiv Nadar University, said.

Still, we may get a surge of new cases of the same coronavirus and this will be considered a second wave, Bhattacharya explained.

The second epidemic may come back in late July or August in the monsoon, although the peak timing will depend on how we control social distancing during that time, he said.

Rajesh Sundaresan, professor at Bengaluru's Indian Institute of Science (IISc), agreed.

“Once we return to normal activity levels, there is a chance that infection may begin to rise again. China is seeing this to some extent post easing of some restrictions on travel,” Sundaresan, corresponding author of a working paper by researchers at IISc and the Tata Institute of Fundamental Research (TIFR) in Mumbai, said.

On March 25, when the number of coronavirus cases was 618 with 13 deaths, the government announced a nationwide lockdown that was later extended to May 3.

On Friday, the death toll due to COVID-19 rose to 718 and the number of cases to 23,077, according to the Union Health Ministry.

In good news, officials said this week that the doubling rate of cases has slowed down in the period, going from 3.4 days before lockdown to 7.5 days, with 18 states doing better than the national average. The recovery rate has also almost doubled in the last 10 days.

"Looking at the new cases in the past few days, it seems the growth of new daily infection is much slower than earlier. This apparently indicates that we might have reached at the plateau of the growth curve, Bhattacharya said.

He noted that recent studies in China and Europe observed that the infection might relapse in those people who have already recovered from earlier phases.

So, there is no evidence that the earlier infection may help acquire immunity against the second infection. And in that way, the entire population may be vulnerable to the second wave to some extent, said the scientist.

In their study unveiled this week, IISc and TIFR researchers analysed the impact of strategies such as case isolation, home quarantine, social distancing and various post-lockdown restrictions on COVID-19 that might remain in force for some time.

The study modelled on Bengaluru and Mumbai suggests the infection is likely to have a second wave and the public health threat will remain, unless steps are taken to aggressively trace, localise, isolate the cases, and prevent influx of new infections.

The new levels and the peaking times for healthcare demand depend on the levels of infection spreads in each city at the time of relaxation of restrictions, they said.

The lockdown is currently upon us. It has given us valuable time. Let us test, trace, quarantine, isolate, practice better hygiene, search for a vaccine, etc. We should do these anyway, and these are being done. When and how to lift the lockdown is going to be a difficult decision to make, said Sundaresan.

It's clear that it's going to be phased. What our team is focusing on is to come up with tools to help the decision makers assess the public health impact of various choices, he said.

According to the experts, infectious diseases spread via contact between infectious and susceptible people. In the absence of any control measures, an outbreak will grow as long as the average number of people infected by each infectious person is more than one.

Once enough people are immune there will be fewer people susceptible to the infection and the outbreak will die.

However, when an outbreak is brought under control by social distancing and other interventions, it is possible only a small proportion of the population will have been infected and gained immunity, they said.

This means enough susceptible people may remain to fuel a second wave if controls are relaxed and infection is reintroduced.

Until the vaccine comes on the market, we have to remain alert Once sporadic cases occur here and there in the country, we immediately need to implement quarantine or social distancing locally for the people in that region, and also need to perform tests to identify positive cases irrespective of showing symptoms, Bhattacharya explained.

Note that these monsoon months are also flu season in many places of India. So, we should not ignore the early signs of the flu symptoms. Irrespective of symptoms, we need to increase tests in the hotspots to identify people and contain the surge, he said.

Sundaresan added that the timeline for a second wave will depend on a lot of circumstances which may change as the time passes.

Significant testing may have been underway, there may be behavioural changes with people becoming more careful about their hygiene, wearing masks may become more common, etc. All these responses may help restrict the second wave, he said.

A study published in The Lancet journal earlier this month modelled the potential adverse consequences of premature relaxation of interventions, and found it might lead to a second wave of infections.

The finding is critical to governments globally, because it warns against premature relaxation of strict interventions, the researchers said.

While interventions to control the spread of SARS-CoV-2 are in place, countries will need to work toward returning to normalcy; thus, knowledge of the effect of each intervention is urgently required, they said in the study.

According to a recent analysis by the Harvard Chan School of Public Health, the best strategy to ease the critical care burden and loss of life from COVID-19 might be on-again, off-again social distancing.

In the absence of such interventions, surveillance and intermittent distancing may need to be maintained into 2022, which would present a substantial social and economic burden, the researchers wrote.p

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