RBI rescue plan fails to cheer markets
The RBI and the government announced measures to boost the rupee and the markets, as promised, on Monday — Pranab Mukherjee’s last day as finance minister — but failed to calm nervous investors.india Updated: Jun 26, 2012 01:47 IST
The RBI and the government announced measures to boost the rupee and the markets, as promised, on Monday — Pranab Mukherjee’s last day as finance minister — but failed to calm nervous investors. The RBI, in consultation with the ministry, allowed Indian companies to borrow foreign funds of up to $10 billion (about Rs. 57,000 crore) to repay domestic loans. It also raised the limit on foreign investments in government bonds by $5 billion (about Rs. 28,500 crore) to $20 billion (about R114,00 crore) and made foreign investment in infrastructure bonds easier. But currency and equity markets gave a thumbs down to the RBI measures. The 30-share Sensex closed at 16,882.16, down 90.35 points or 0.53 %, while the rupee closed at 57.09 to the dollar. The steps did not directly address the concerns in the real economy — the growth rate crashed to a nine-year low of 5.3% in January-March, affecting job prospects. “The economy looks a bit a weak... lots of steps are being taken by the government to correct them,” Montek Ahluwalia, deputy chairman of the Planning Commission, said. Meanwhile, commerce and industry minister Anand Sharma promised the Global India Business Meeting 2012 in Antwerp that India would move forward with the proposal to allow 51% FDI in multi-brand retail.