Neither the government nor the Reserve Bank of India (RBI) has drawn a red line on where the rupee should be, said Montek Singh Ahluwalia, deputy chairman, Planning Commission, in an interview to Karan Thapar on CNN IBN’s Devil’s Advocate programme.
“I do not believe that either the government or the RBI have taken the view that we are drawing a red line on where the rupee should be. At the moment in my view, the rupee is a bit over depreciated,” said Ahluwalia.
The rupee has been plummeting new depths and touched a record low of 65.56 against the US dollar last Thursday.
“I think what is happening now for the first time, people are beginning to say that the rupee has over-shot. While I know there is one bank and in my view, without any basis what-so-ever has said that it will go to Rs. 70. There are two or three others that have said that it will go back to 61, it will go back to 60. So we are facing a genuine uncertainty,” said Ahluwalia.
“Ninety five per cent of government’s energy at this moment should be spent trying to make sure that the impediments to growth are removed,” he added.
On the possibility of India going to the International Monetary Fund for funds, Ahluwalia said: “(It is) absolutely ridiculous suggestion. The scale of facility you would need to get from IMF is very small compared to the (foreign exchange) reserves you have.”