The rupee is expected to revert to a more reasonable value soon and the government is ready with measures if required, department of economic affairs secretary Subhash Chandra Garg told Deepshikha Sikarwar in an interview. Edited excerpts.
We have already had one round of measures on the rupee. Do you think a second round of measures is required where we raise dollar funds — NRI deposits, FCNR etc?
Dollar reserves are large — 10 times import cover, five years’ current account deficit and 10 years from balance of payments (BoP) perspective. Still, we have taken measures to improve it further. The oil marketing companies have been allowed to raise $10 billion. We have talked to people—$4-5 billion masala bonds are coming in the next couple of months. People are talking of the order of $30 billion of reserves more. But in the context of $400 billion of reserves, $15 billion measures have already been taken. How much have we used our reserves so far? Not much. BoP gap is at best $30 billion. We are keeping everything ready, if need be we can raise it.
The finance minister also talked of measures to boost exports. What is the status of that?
The commerce department has identified the areas where opportunities exist for our exports to go up. There are some opportunities where we have the capacity for exports and competitiveness. Some areas are getting generated because of the trade tensions — in the US, China and elsewhere. Item by item, the commerce department is analysing and taking it up with the concerned manufacturers and exporters. There is no proposal to provide export-related incentives in general. The depreciation of the rupee itself has provided a large advantage. What we need to do now is to encourage exports.
Have the foreign investors in IL&FS reached out to you for some sort of assurance?
They have two major foreign investors — ADIA and Orix. They have been on the board for quite some time. Their understanding of IL&FS should have been much more and deeper. At this moment, the entire board has been superseded. So, they are no longer the directors, but their equity remains intact. We would assure them that this is not an attempt to deprive them of the value of their investment. Possibly, the way it is being handled may give them the best value, whatever it may be. The fact they were themselves not subscribing to equity rights issue, they will now need to wait about how IL&FS gets resolved and what is left for them. This was a commercial decision of theirs. Commercial decisions sometimes are hugely profitable, sometimes not.
We continue to work with ADIA in several fronts. They are also in NIIF (National Investment and Infrastructure Fund). They are strongly focused on India. They have also lots of profitable assets. They are also interested in IBC (Insolvency and Bankruptcy Code) process assets. They remain interested in India. We will speak to them, the management will speak to them.
The government has cut excise duty on petrol and diesel. There is renewed concern on the fiscal side. Markets are not doing well, so how does the government meet its disinvestment target?
Direct taxes are doing well, growing at rates higher than budgeted. Non-tax minus disinvestment is also doing well. Corporate profits are doing well — so we hope to do well on dividends.
Disinvestment is going steady, some temporary market disruptions might affect it for some days, some weeks, but I don’t expect it to have any shortfall there. GST (goods and services tax), there might be some shortfall, but let’s wait for the festival season, the consumption season, to start. I will watch the numbers very carefully. If they reflect good growth, we may not have much cause for fiscal concern.
There is some reduction in expenditure without any cuts or advisory. We hope if there is some revenue shortfall that can be covered by such expenditure reduction. Our expectation is we are pretty sure our finances will be in order and fiscal deficit will not be breached.
Source : Financial Express