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Government takes five decisions to control current account deficit


As part of government’s efforts to contain current account deficit, Finance Minister Arun Jaitley today said government has taken five decisions in this regards. Jaitley said government is trying to maintain the fiscal deficit and it is confident of meeting fiscal deficit target. The government feels that these steps will have a $5-10 billion effect on the economy. He also said that besides these five decisions, more steps are under consideration.

These decisions were taken in a meeting chaired by Prime Minister Narendra Modi. The meeting was attended by Finance Minister, RBI Governor and other ministry officials. PM Modi will hold another economic review meeting with key policy makers on Saturday to discuss possible interventions by the government to address the macroeconomic challenges arising out of the depreciating rupee and steep rise in fuel prices.

Here are the five key decisions taken today:
* Masala bonds issued in FY19 exempted from withholding tax

* Import curbs on non-essential items will come into effect. Government will also take measures to boost exports.

*To review removal of exposure limit of 20 per cent of FPI’s corp bond portfolio to a single corp group and 50 per cent of any issue of corporate bonds

* The mandatory hedging condition for infra loans will be reviewed

* Manufacturing firms will be able to avail loans up to $ 50 million of maturity of 1 year

The rupee touched an all-time low of Rs 72.91 per US dollar on Wednesday and closed at Rs 71.85 on Friday. Fuel prices, too, have been breaking records for some days with petrol selling at Rs 81.28 in Delhi and Rs 88.67 in Mumbai on Friday.

The country’s fiscal deficit in the first four months of 2018-19 has already touched 86.5 per cent of the full year’s target of Rs 6.24 lakh crore. On August 31, the Controller General of Accounts (CGA) said the fiscal deficit for April-July was Rs 5.40 lakh crore.

Source: Economic Times