Weaker Rupee No Cause For Concern: Deutsche Bank

Deutsche Bank chief economist Norbert Walter yesterday said the recent depreciation of the rupee was not a cause for concern as the rupee had appreciated against the euro and the yen. "It is astonishing that there is so much concern about depreciation against the dollar," he said adding, "The Indian rupee has been under mild attack, but one must not forget that the rupee has gained against the Euro and Yen." Walter also said China, compared to India, was better prepared to face the challenges of globalisation and benefit from the World Trade Organisation's policies as it could take quicker decisions. "India also needs to make structural changes beginning with education and then infrastructure, where there is a need for privatisation," he said. He also said the privatisation programme in India needed to pick up. He predicted that the Indian economy would grow at 6.8 per cent during the current year and the growth rate could increase to 7 per cent over the next few years provided infrastructure facilities improve and the information technology sector continued to remain buoyant. On the Rs 117,000-crore borrowing target for 2000-01, he said the Indian government should consider indirect taxes and user charges to reduce fiscal deficit and borrowings. India has to use all its skills and if necessary take the help of international advisors, to come up with ideas to increase tax revenue, Walter said, adding, "Otherwise the government would not be able to carry out improvement in the infrastructure of the country." The savings in the country are not "optimally" utilised and suggested that pension and provident funds should be allowed to flow into the equities market. "There should be lesser intervention of the government in the process of allocation of funds," he said. He also watered down fears that the stock market in India has witnessed volatility saying, "In a situation where the European and US markets are over-priced, it would be wrong to assume that the Indian market would witness boom." On the consolidation taking place in the global banking industry, Walter said, "There would be more consolidation across the borders in Europe and the consolidation will not be limited to banking companies only." Banks will also merge with others." India, too, would witness such consolidation in the wake of the global consolidation as it cannot stay aloof from the system, he added. On bank privatisation in india, he said "I would advice the government not to be too radical." Deutsche Bank has recently acquired Mumbai-based IIT corporate services, a subsidiary of the industrial investment trust. Walters said the bank, after acquiring banker's trust in the US, has become a major player in the custodian business and takover of iit was part of the expansion plan.