Giving a leg-up to the prospects of strengthening the rupee that has lost nearly 20% this year against the US dollar, economic affairs secretary Arvind Mayaram said on Wednesday that India was well on way to containing the current account deficit (CAD) in 2013-14 to 3.7% of the GDP.
He slammed credit rater Standard & Poor’s suggestion earlier this week that India had a 33% charge off a downgrade.
“We are working towards that (CAD cut). We might surprise you with less than 3.7%,” Mayaram told reporters on board the prime minister’s special aircraft on way to the Russian city of St Petersburg to attend the global summit of the G20 group of the world’s elite economies. India’s CAD was at 4.8% of the GDP in 2012-13.
Manmohan Singh landed in this culturally rich city with a promise to persuade developed countries to manage their monetary policies so that emerging market currencies like that of India do not get hurt.
Mayaram, an IAS officer from Rajasthan, said India was concerned over a spike in oil prices that directly affect India’s government finances and hinted that more efforts to check fuel consumption was on the way after last weekend’s fuel price hikes.
“There have been some measures to restrict oil imports and we will continue to work towards that,” said the bureaucrat who is crafting key policies with finance minister P Chidambaram.
Mayaram said India reserved the right to take any action to counter the adverse effects of policies in developed economies whose easy money policies have cause the rupee to weaken after flooding emerging markets with foreign exchange. “But I think we would be able to manage the situation resorting to drastic measures,” he added.
Challenging the statement from global credit rater Standard & Poor’s that India’s chances of a downgrade was 33%, Mayaram said there was no mathematical basis to suggest that.
“I don’t think we have a case for a downgrade,” he said, adding that despite headwinds to growth across the world, India’s economy was on sound footing.