The rupee has not depreciated to ‘too worrying levels’, though the government needs to take care of the widening current account deficit (CAD), according to former RBI governor Raghuram Rajan.
The rupee on August 16 had slumped to a life-time low of 70.32 on strong demand for the US dollar, reported PTI.
“Well just to be fair, the Indian authorities have brought down the fiscal deficit. What has expanded is the current account deficit. A lot of it driven by higher oil prices,” he was quoted as saying.
“The rupee has not depreciated to too worrying levels, its sort dollar strength around the world,” Rajan told a TV channel.
Rajan, who was RBI governor for three years till September 2016, said further that this is a time where countries should be focusing on getting the macro stability in order, the report said.
“Going into election year, countries like India and Brazil should try their level best to look as good as possible,” he reportedly said.
On the controversy over back series GDP data which showed that the growth was better during UPA regime, Rajan said: “What we have to do right now is to look forward…its growing at about 7.5 per cent.”
India, he added, has to make sure that CAD does not grow out and fiscal stability is maintained.
On rising bad loans, Rajan said there is a need to improve governance in the banks. “My sense is that whichever new administration comes this will be task number one for them,” Rajan, who is currently the Katherine Dusak Miller Distinguished Service Professor of Finance at Chicago Booth School of Business, reportedly said.
India’s trade deficit soared to a near five-year high of USD 18 billion in July, raising concerns on the current account front.
Recently, a top finance ministry official reportedly said that the government will meet the fiscal deficit target for the current fiscal but is also expecting some slippage in the CAD on higher crude oil prices.