The Indian rupee is Asia’s worst-performing major currency this year. It has declined as much as 1.3 per cent and touched a new low on Monday.
The opposition parties have criticised the government of India for not doing enough to arrest the fall. For the first time in weeks, the finance ministry has expressed some concerns over the issue.
According to The Economic Times, a government official told the media in New Delhi that authorities could take measures such as tapping non-resident Indians to arrest the fall.
“We are considering several options which could include overseas borrowing like NRI bonds or deposit scheme for foreigners,” an official was quoted saying by the Indian Express.
A similar scheme was launched in 2013 when about USD 34 bn were raised through discounted foreign-currency swap to lift the falling rupee.
However, this scheme has its shortcomings too. Economist Dr Vinod Mishra of Monash University explains, “Similar scheme was launched by the then Atal Bihari government under the name ‘India Resurgent Bonds’. However, it is a quick fix and not a permanent solution as you have to return the money to the NRI investors after a period.”
Dr Vinod Mishra explains if the NRIs should be happy about the falling value of Rupee. Listen to this complete interview by clicking above.
