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Ready for US tapering measures: Chidambaram

world Updated: Oct 14, 2013 20:11 IST
HT Correspondent
HT Correspondent
Hindustan Times
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India is prepared for the tapering of quantitative easing by the US, and won’t be caught off guard like last time, when the rupee was mauled merely by talk of it.

“We are in fact prepared for tapering,” finance minister P Chidambaram told CNBC-TV18 in an interview during his visit here for the World Bank Groups’ annual meetings.

“So we are taking a number of steps to shore up foreign exchange reserves,” he added.

The minister also said Walmart’s absence from the Indian multi-brand retail market won’t be noticed. It will be a mere “speck”. The retail giant recently announced it was pulling out of India.

On the crisis at the National Spot Exchange Limited, Chidamabaram said the government was not planning to take it over. And that law was taking its course.

He raised once again his criticism of IMF’s dim growth output for India in 2013, asking for an explanation for slashing it from 5.6% to 3.8% in its latest World Economic Outlook.

The Indian currency was mauled last few months after the US Fed indicated it was tapering Quantitative Easing, a programme to pump cash into the recession-hit US economy.

But chairman Ben Bernanke changed his mind, announcing in September the US economy was too fragile for tapering QE -- also known as Easy money -- and let the programme continue.

The rupee recovered immediately. But not without leaving a message for Indian policy framers that India must be prepared for that eventuality, which, the finance minster said, it is now.

Chidambaram said Bernanke has hinted tapering will start. But the minister didn’t say if that indication from the Fed chairman came at the India-US dialogue on Sunday or elsewhere.

But India is ready, said the minster listing some of the measures.

* Shoring up foreign exchange reserves: Since the FCNRB revised policies were announced, about $7.4 billion has come in.
* Indian has entered into an agreement with Japan for a $50 billion swap arrangement.
* Portfolio investment has brought in about $2 billion already
* Oil marketing companies are being encouraged to borrow abroad to fund their oil buys.
* Liberalised External Commercial Borrowings (ECB) norms will also bring in some money, the minister said.

But the minister said he hopes Bernanke “will be a little more careful, more calibrated and he will perhaps communicate his actions well in advance” this time.