Steps to arrest Rupee slide on anvil, announcement likely soon

Hectic deliberations were held in the Finance Ministry over the extended weekend on ways to stabilise the volatile domestic currency, which had touched a record low of 61.80 to a US dollar last week. The government is likely to announce on Monday a slew of measures, including raising duties on non-essential goods and relaxing norms for overseas fund raising by corporates, to stabilise the rupee. Hectic deliberations were held in the Finance Ministry over the extended weekend on ways to stabilise the volatile domestic currency, which had touched a record low of 61.80 to a US dollar last week. "Some measures are in the offing," sources said, adding that government's focus is on attracting foreign inflows.

Finance Minister P Chidambaram had earlier said that the government is working on relaxing External Commercial Borrowings (ECB) norms for corporates as well considering allowing public sector undertakings to issue quasi-sovereign bonds which could fetch foreign exchange. A host of PSUs with strong balance sheets have already approached Finance Ministry seeking relaxation on overseas fund-raising. Apart from attracting overseas money, the government is also considering the report of an inter-ministerial panel for restricting non-essential imports by hiking duties. The Finance Minister had earlier said that the government would be looking at "some compression in non-oil and non-gold imports, especially of non-essential goods", citing examples of coal and electronic hardware.

The steps by the government would be in addition to those already announced by the Reserve Bank to contain the sliding rupee, which has lost over 15% since April. The RBI last week announced it would auction Rs22,000 crore of bonds every Monday to suck out liquidity and check speculation in the forex market. The RBI and the government have also taken steps to curtail imports of gold -- a major reason for rise in CAD, which touched a record high of 4.8% of GDP in 2012-13.