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India can face US development: Biz
Publication Date : 20-12-2013
Trade and industry echoed the finance minister's sentiments on the issue of the United States Federal Reserves’ overnight announcement to slash monthly buying of its US$85 billion worth of government bonds by US$10 billion with effect from January 2014.
“India is now definitely in a better position to manage its balance of payments as the government and the central bank RBI has taken effective steps to build up forex reserves and render stability to the foreign exchange market,” said Ficci president Naina Lal Kidwai.
“The recent trends in our trade and current account data clearly indicate that the current-account deficit (CAD) for this fiscal would narrow down to less than US$50 billion, well within sustainable limits. Regular policy interventions are in fact required for curbing imports of indigenously available resources and economising imports of oil through conservation plans and push to domestic production to improve our trade balance over the long-term,” Kidwai said.
“Further, we cannot disregard the possibility of turbulence in the Foreign Institutional Investors (FIIs) market as seen earlier this year. The need for strengthening our domestic financial institutions has to be re-emphasised. The capital markets have to be made more deep and efficient to attract long-term investments and reduce the risk of volatility in capital flows,” she said.
“We do not expect the tapering to really cause any big disruptions in India's external sector and the rupee is expected to remain range bound.
The position with regard to CAD is quite stable and is likely to remain so,” said Assocham secretary general DS Rawat.
The positive side to the tapering phenomenon is that the US economy is improving which will improve the potential for exports to the American markets.