NO KNEE-JERK REACTION ON RUPEE: JAITLEY
No need for knee-jerk reactions, says Jaitley
Union Finance Minister Arun Jaitley said on Wednesday the upheaval in oil prices and the rupee was due to global situation, and the Centre would not take any decision out of panic that could be seen as a ‘knee-jerk’ reaction. There was virtually no domestic reason that could be attributed to the fall in therupee, hesaid.
Finance Minister Arun Jaitley said on Wednesday that the upheaval in oil prices and the rupee was due to global factors, and the government will not take any decision out of panic that could be misconstrued as a ‘knee-jerk’ reaction.
Jaitley was addressing a press conference – his first after his recovery from a kidney transplant surgery – after a meeting of the Union Cabinet. His comments come even as prices of petrol and diesel have reached a record high and the rupee has touched a lifetime low of 71.97 versus the dollar.
In the media briefing, Jaitley also hit back at the Congress and its President Rahul Gandhi on their allegations regarding the Rafale fighter jet deal and said the Centre will continue supporting Kerala in its post-flood rehabilitation efforts.
“If you look at the domestic economic situation and the global state of affairs, there’s virtually no domestic reason that can be attributed to the fall in the rupee. The reasons are global. We must bear in mind that in the last few months, the dollar has strengthened against every currency. As far as the comparison with other currencies is concerned, the rupee has always strengthened or remained within range,” Jaitley said.
When questions were asked on global crude oil prices and their impact on petrol and diesel prices, Jaitley said: “We are net buyers of oil and if by creating a shortage oil prices are temporarily raised, that adversely impacts us. That’s an external factor. We are not in the trade war business, but when countries neighbouring us devalue their currencies, it has a corresponding effect on us.”
“Eventually the inherent strength of the Indian economy has to play a very important role. The Reserve Bank of India is doing whatever is necessary to deal with the situation. I don’t think there’s any need for the world’s fastestgrowing economy to react adversely,” he said, while replying to questions on the fall in rupee.
The rupee’s unabated fall continued for the sixth straight session on Wednesday, hitting yet another closing low of 71.75, down 17 paise against the US greenback, even as surging oil prices and the weak trend in emerging market currencies weighed on sentiments. Intraday, the domestic unit plummeted to a historic low of 71.97 a dollar before finding respite, staging some recovery towards the tail-end.
Additionally, Business Standard has learnt that the finance ministry officials have informed the political leadership that any cut in excise duty, despite petrol and diesel prices touching record highs, was ill advised if the government wanted to stick to fiscal deficit targets. The leadership has also expressed its willingness to ride out any political storm, which was evident from Jaitley’s statements later in the day.
The fiscal deficit target for 2018-19 is 3.3 per cent of gross domestic product. The petrol price in Delhi on Wednesday was ~79.4 per litre; for a litre of diesel, one would have to cough up ~71.4. The government, however, does not want to take any populist measures — and derail the fiscal deficit target — in an election year. This is important; more so in the light of lower-than-targeted goods and services tax collections so far.
Responding to the Congress allegations on the Rafale fighter jet deal, Jaitley attacked the Congress president for his “immaturity”. He said Gandhi’s immaturity was contagious and affected others in that party. Jaitley rejected the Congress demand for a joint parliamentary committee probe into the Rafale deal. In a reference to the Congress chief, Jaitley said satisfying “the ego of an illinformed gentleman is not an option.”
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