This refers to the Editorial ‘Current concerns’ (October 7). With ballooning trade deficit, the current account deficit of India is also widening. According to reports, India's current account deficit likely widened to its highest in nearly a decade in the April-June quarter, driven by soaring global commodity prices and the biggest capital outflows since the global financial crisis of 2008. Now, with the Indian rupee having breached a record 82 to the US dollar, coupled with a worsening trade gap, worries over the size of the current account shortfall are set to intensify.
Another aspect of depreciating rupee is the rise in imported inflation, which raises broad-based inflation. So the RBI also ensures that the rupee does not fall sharply, as this could increase the inflation in the economy. It conducts periodic ‘intervention’ in the foreign exchange markets by selling foreign currency and buying the rupee.
N Sadhasiva Reddy
Bengaluru
Cold comfort
There is a constant defense from the government and its supporters that in this economic downturn, India is doing better than its peers and all other developed nations too. This is cold comfort for the devastation it has caused to the millions of people.
After failing to stop the fall of the rupee by selling dollars, the government has now realised the folly of this step. As a result the dollar is now trading at over ₹82. The government would do well to listen to the speeches of its leaders pre 2014.
All agencies are downgrading India's projected GDP numbers. The World Bank estimate of 6.5 per cent is the lowest. Many think it would be around 5 per cent. This could be the end of the high growth rates for the Indian economy.
Anthony Henriques
Mumbai
Rupee rumble
Apropos ‘An economic storm’ (October 8), even though the sliding rupee, decreasing forex reserves, falling exports and rising imports are causes of concern, both monetary and fiscal policies are well under control . The government’s reduced expenditure and curbs on freebies are sound fiscal policies.
Fed's rate hiking pressure and increasing oil prices have disturbed global supply chain.
NR Nagarajan
Sivakasi
GST unjustified, for now
Apropos ‘Agri-Biz exporters oppose GST on Freight’ (October 7), this will have larger implications in view of several factors that are directly affecting the export sector in general. With the dollar gaining strength against the rupee, ocean freight container charges escalating in addition to higher expenses at the ports like THC etc., container shortage, air freight charges going up due to ATF prices, forex reserves falling due to pullout by FPIs, the trade deficit, GST levy on freight is highly unjustified, at least at this point of time.
The concerned ministry must focus on mitigating the distress by interacting with various sectors before loading with any new burden.
Rajiv Magal
Halekere Village (Karnataka)
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