Govt will not rush to issue bonds to arrest rupee's fall: Mayaram

Govt will not rush to issue bonds to arrest rupee fall
The secretary in the department of economic affairs Arvind Mayaram on Monday said that government will not rush to issue sovereign bonds or tighten the capital controls in the economy to arrest rupee's fall as the situation is actually not as worse as it was in 1991.

The statement came on the backdrop of rising speculation that government may issue sovereign bonds as forex reserves deplete. There has also been speculation that the government would impose curbs on imports and restrict capital outflows through measures such as capping spending on credit cards overseas.

Mayaram said that issuing bonds and undertaking other such knee-jerk measures can send a wrong signal to the investors while adding that various fund-raising options were under consideration.

"It is very easy to suddenly think of these knee-jerk measures. But if we are talking of having confidence in our economy, then we need to also demonstrate that confidence," he said.

"I don't believe we need to take those kind of measures (capital controls) because we will be able to manage the situation. It's not as if it's just completely run out of hand," Mayaram said.

"There was a life before quantitative easing. FII flows were happening even before quantitative easing took place. So our FII flows are not dependent on quantitative easing. It's not as if everybody is running away from India. Flows are also coming in. This will stabilise," he said.

About the stalled growth in the economy due to infra blockage, Mayaram said that investment cycle will revive towards the end of current year as Cabinet Committee on Investment (CCI) fast-tracks approval of delayed projects. He said that CII has already approved projects worth USD 27 billion between Jan and Apr this year.

"By the end of the year, you will see a large number of Indian investors investing in the economy, which we have not seen till now," Mayaram said.

Read more about: mayaram
Story first published: Tuesday, June 25, 2013, 9:30 [IST]
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