RBI may step in again to check rupee slide

The Reserve Bank of India (RBI) will again intervene to check any further depreciation of rupee, if required, the finance ministry has assured the pertinent parliamentary standing committee.

The officials of the ministry held a six-hour-long meeting on Friday on critical economic issues with the MPs’ panel on finance. An MP later said the officials pointed out that RBI had already intervened to check the slide, lest the situation worsened. “The officials said the dollar, in the current global economic scenario, is being being seen as a more secure, compared to other currencies,” he told Business Standard. “This is the reason behind the rush towards dollar.”

Chief Economic Advisor Kaushik Basu, Revenue Secretary R S Gujral and Economic Affairs Secretary R Gopalan attended the meeting. RBI Governor D Subbarao was not present. The MP said the black money issue dominated the meeting. There were “intense discussions” on disclosing the names of those 700 foreign account holders that France provided four months ago.

“If you don’t disclose the names of 700 account holders, then your minister will tell us in Parliament,” BJP member SS Ahluwalia threatened the finance secretary. At this, Gujral agreed to provide the committee the names in the “next few days”.

“The finance secretary said the government was in discussion with one more country on similar lines to acquire bank account details; and that is why we don’t want to disclose the names of the account holders (to the Supreme Court), the member said.

“Action is being taken against 69 people out of the 700 names given by France. It will take another at least one year to check and take action against all the account holders.”

Gujral argued actionable information from Paris came after finance minister Pranab Mukherjee had met his French counterpart twice last year. The panel members raised concerns over the decline in GDP growth rate and fiscal deficit breaching the target of 4.6 per cent of GDP due to the ballooning oil subsidy bill and sluggish disinvestment prospects.

Another MP said the officials were pointed out that the economy could go into the zero-growth terrain, as growth rate might slip below seven per cent and fiscal deficit touching six per cent level.