Govt should focus on boosting exports, import curbs may not help control CAD: FIEO
Team Udayavani, Sep 15, 2018, 4:45 PM IST
New Delhi: The government should focus primarily on boosting exports to check the widening current account deficit as imposing curbs on imports may not have a significant impact, exporters’ body FIEO said Saturday.
Federation of Indian Export Organisations (FIEO) President Ganesh Gupta said the government should not restrict imports to address rising current account deficit (CAD) and fall in rupee.
“I do not think that we should restrict imports unless we want to join bandwagon of protectionism and hope that it will spur Make in India,” he told PTI.
He also said that CAD at 2.5 per cent of GDP should not be a cause of concern as anything below 3 per cent is not alarming.
“We have sizeable forex reserves to cover 10 months of imports,” he added.
The government on Friday announced an array of steps, including removal of withholding tax on Masala bonds, relaxation for foreign portfolio investments, and curbs on non-essential imports, to contain the widening CAD and check the rupee depreciation.
FIEO Director General Ajay Sahai said the government should immediately ease liquidity for exporters. He said that if the government wants to impose curbs on non-essential items, they can consider products such as high-end electronics goods, refrigerators, watches, gold, and high-end footwear and garments.
However, trade experts raised concerns over imposing import restrictions on goods like gold as it will not help in checking trade deficit.
“It’s very unlikely to help. The government has to consider the pros and cons carefully about such steps,” Professor Biswajit Dhar of Jawaharlal Nehru University said.
He said that knee-jerk solutions will not help and the government should take medium term view, for instance steps for revival of the manufacturing sector.
The current account deficit (CAD), which is the difference between inflow and outflow of foreign exchange, widened to 2.4 per cent of the GDP in the first quarter of 2018-19. Large trade deficit and rupee decline against the US dollar are putting pressure on the CAD.
The rupee touched an all-time low of 72.91 against the US dollar on September 12 and it closed at 71.84. The domestic currency has declined around 6 percent since August and touched an all-time low of 72 level this week.
Petrol and diesel prices have also touched record highs. Trade deficit soared to a near five-year high of USD 18 billion in July, but dipped slightly at USD 17.4 billion in August.
Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.
Top News
Related Articles More
Sensex, Nifty decline on selling in IT shares, FII sellout; end Samvat 2080 with 22% gains
Sensex, Nifty decline in early trade on unabated foreign fund outflows, selling in IT stocks
Gold surges Rs 1,000 to breach Rs 82k-mark as Diwali sparkles demand
Car makers witness record sales on Dhanteras; Oct bookings up by 30%
Dhanteras begins on slow note; Jewellers expect footfalls to increase
MUST WATCH
Latest Additions
Farooq Abdullah seeks inquiry into spike in terror attacks in Valley since Omar’s swearing-in
Sabarimala pilgrims to get free insurance coverage of Rs five lakh
Delhi: Woman chops off her husband’s private parts
Man who threw stub near CRPF school among 50 questioned, not certain if he triggered blast: police
Revisiting work done before England series helped during this knock: Gill
Thanks for visiting Udayavani
You seem to have an Ad Blocker on.
To continue reading, please turn it off or whitelist Udayavani.