On a day the Indian rupee slumped to a record low of Rs 54.56 against the dollar, the Finance Minister, Mr Pranab Mukherjee, played the ‘austerity measures' card to signal the Government's seriousness in improving the fiscal situation.
The Government's spending binge, especially on subsidies, has been a source of concern for the financial markets and has been a factor that brought pressure on the rupee. The existing risk aversion in global markets has also added to the weakness of the rupee.
Between January 1, 2011 and today, the rupee has moved from Rs 44.61 per US dollar to Rs 54.51 per dollar, reflecting a depreciation of 22 per cent. Since the beginning of March, the rupee has tumbled nearly 10 per cent.
“I am going to take little bit of unpopular steps. I am going to issue some austerity measures to convey a signal that we are responding to the situation,” Mr Mukherjee told Rajya Sabha in his reply to the debate on the Finance Bill 2012.
The Rajya Sabha later returned the Finance Bill to the lower house, marking the completion of the three-stage budgetary exercise for 2012-13.
The Finance Minister attributed the stock market slide on Wednesday to the Euro zone crisis (developments in Greece) and also to some slowdown in the Indian economy.
Growth story intact
He, however, said that India's growth story was intact and that there was no need to panic. At the same time, he noted that India cannot ignore the global economic situation.
Later, Mr Mukherjee told reporters at Parliament House that the Expenditure Secretary has been asked to work out the details of the austerity measures.
The steps will be made known after the end of the Budget session (May 22). The Finance Minister, however, declined to comment on the rupee.