Chidambaram rules out rupee devaluation to boost exports
OUR BUREAU
CHENNAI, January 9: Union finance minister P Chidambaram has categorically ruled out competitive devaluation of rupee in the wake of the sharp fall in Southeast Asian currencies. He was replying to a question, at the CII Partnership Summit held in Chennai, on the possible devaluation of the Indian currency to make the country's exports competitive.He, instead, extorted Indian exporters to find newer markets and improve quality and delivery schedules. He added that in the short term, export of gems, jewellery and textiles would be affected, but once the Southeast Asian currencies recovered, these sectors would fare better. He also said that capital account convertibility (CAC), per se, was not the cause for the Asian crisis. It was the management of the system after CAC that would determine whether "we are solvent or not", he said. A current account deficit of more than 8 per cent with unregulated and misdirected private sector borrowings from abroad could lead to problems. "We have a very good road-mapto CAC and we will not move forward till all the signposts are clear," he said, when asked about India's cautious move towards full CAC. Earlier, addressing the gathering, he said that it was not fair to "denigrate the achievements of the East-Asian miracle". The financial crisis faced by these countries today could not be allowed to obscure the extraordinary achievements in the past three decades. The sustained growth exhibited by these nations had raised the standards of living of their people and virtually eradicated poverty. He expressed the hope that the countries would overcome "these temporary difficulties". On the performance of the United Front government, he said that the best gift of the government was keeping inflation low at 4 per cent in the past six months. In a country where two-thirds of the population lived below poverty line, what could be a better gift? he asked. He added that his government had brought about a clear improvement in infrastructure in the areas of power generation,
telecom and freight movement. On the external side, Chidambaram said that foreign inflows in the form of foreign direct investment and institutional investments had registered a sharp increase although there was a temporary setback on the FII front due to the Asian crisis.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
|
