To stop further depreciation of rupee and widening of current account deficit (CAD), the government on Friday took five measures and a broad policy decision to curb non-essential imports and increase exports.
Finance Minister Arun Jaitley, after holding a detailed discussion with Prime Minister Narendra Modi, said the government is committed to maintain its fiscal deficit target even as it monitors the impact of external factors on the Indian economy.
“One broad policy decision was to address the issue of expanding current account deficit. The government will take necessary steps to cut down non-essential imports and increase exports,” Jaitley told reporters after the high-level meeting.
The meeting was attended by Reserve Bank of India (RBI) Governor Urjit Patel and senior officers from the Prime Minister’s Office (PMO), Finance Ministry and the RBI.
“The non-essential import items would be decided in consultation with various ministries and will be announced as and when the decisions are taken in the next few days.”
Jaitley said policy decisions by the US increased inflow of dollar in the US economy compared to other economies. The government is monitoring the impact of external factors like crude oil prices and trade wars on India despite its strong fundamentals.
“Due to these two factors our current account deficit has increased. We have to face this challenge,” he said.
India’s current account deficit widened to $15.8 billion, about 2.4 per cent of the country’s GDP in the first quarter of this fiscal as against $15 billion in the year-ago quarter.