The Chief Economic Adviser in the finance ministry, Raghuram Rajan, has said that government will announce more steps to curb the Current Account Deficit (CAD) which has become the only major hurdle in central bank's way to reduce the lending rates to support growth.
The statement of Rajan came soon after RBI decided to maintain status quo on key policy rates, citing the high CAD and falling rupee as the priorities while inflation continued to moderate.
"We have already taken some steps on liberalising FDI (foreign direct investment). We are also exploring some other options for stably and sustainably funding CAD. We will announce specific measures in the next few weeks," he said according to a media report.
Among other things, the Prime Minister Manmohan Singh on Monday discussed the ways to reduce CAD with industry leaders. The industry leaders and the PM discussed steps like issuing sovereign bonds to foreign investors, raising the duty on non-essential imports, incentivising exports, etc.
"Even as the Reserve Bank of India (RBI) does what it needs to do, the government is exploring ways to reduce CAD, including measures to reduce imports and measures to incentivise or expand exports," said Rajan.