Assurances from RBI are encouraging on the current account deficit

In case of oil and gas, it is neither possible nor desirable to completely stop imports as we have long term supply agreements on hand.  But, what can be done that needs to be put into immediate effect? Some measures that the government can take.

According to various financial experts, the efforts taken by Reserve Bank of

India, however laudable, have not produced the desired impact and the rupee continues its slide downward, to go beyond Rs65 to a US dollar!


Obviously, the government is trying to tackle the issue as the rupee battled and closed at Rs64.63 against the US dollar.  The US plans to taper down its bond buying programme in September are in the minds of the operators, but in the meantime, it is imperative that some more steps are taken in the country to stem this rot.  The assurances from RBI are encouraging but fear lurks in the minds of one and all. Will it go beyond Rs65 today, the last working day of the week?


As we have said before, one school of thought strongly recommends the disposal of gold in the international market to meet the current account deficit challenge. And yet taking into account the fact that festival and wedding seasons are close at hand, the government may not decide on this option, though it would ease the situation a bit.


The other major contributor for the crisis is our continuing dependence on the import of energy/ fuel requirements.  In case of oil and gas, it is neither possible nor desirable to completely stop imports as we have long term supply agreements on hand.  But, what steps can be put into immediate effect are:


a) Permit Cairn India to increase its production capacity by waiving any clearance obstacles that are preventing the output to 250,000 bpd and beyond.


b) Authorize them (Cairn) to repossess the surrendered areas for them to intensify exploration, instead of going through the mill.


c) Remove the pin-pricks associated with the 11 km pipeline that has so far prevented Gujarat State Petroleum awaiting environmental clearance for more than 5 years now.


d) Direct Reliance to expeditiously handle the issues relating to increasing the production of both oil and gas.


e) If ONGC has any pending clearance issues, then, these should be handled also on a war footing.


f) Like Iran has agreed to a barter in supply of oil, why not try to secure similar opportunities elsewhere?


g) In the case of Coal India's imports, it has been reported in the press, that the offtake of production by power generators has been lower and in the case of NTPC, they have also stated that they have no takers (poor consumption!) - and here again, we have long standing coal contracts to import coal - all these need to be seriously audited and immediate steps need to be taken to rectify the situation.


h) Domestic output of edible oils and pulses has increased, thanks to heavy  monsoon. Besides, international prices have begun to drop.  This will help India save some $4 billion in imports by relying on indigenous production. It is to be noted that international prices of pulses have also come down by 20% so far, coming from Canada, Myanmar and Australia. Since palm oil supplies have began to increase, edible oil prices will also fall. We reiterate that foodgrain exports must now get a further push and efforts be made to stop wastage and damage to stocks lying in the FCI godowns.


All these measures, if attempted seriously, can definitely bring in some much needed relief from the troubles that CAD has caused.  Efforts to woo the NRIs to remit more funds back home needs by assuring them a guaranteed rupee exchange rate may also bring in favourable response, as most of them now may be holding up their regular remittances in the hope of a further fall and the uncertainty associated with it. No one wants to accept a lower exchange value for his hard earned foreign currency today, if he thinks that he can have a better return a few days from now!


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

disa sarma
8 years ago
I have used for comparison of daily exchange rates for different banks/companies. I also like the graph on their website that shows the trend of the exchange rate over the last year, as published by Reserve Bank of India. I haven't asked any questions on their website but looks like they have a section on their website called community. Currently most of the questions so far are taxation related though and have been answered by CPAs from US and CAs from India.
disa sarma
8 years ago
I have used for comparison of daily exchange rates for different banks/companies. I also like the graph on their website that shows the trend of the exchange rate over the last year, as published by Reserve Bank of India. I haven't asked any questions on their website but looks like they have a section on their website called community. Currently most of the questions so far are taxation related though and have been answered by CPAs from US and CAs from India.
8 years ago
Its the greatest decline in the history of rupee. No one can say it what actually the reason is there for the financial downfall of the rupee. But it is a great time for the financial brokers or currency exchange persons.
8 years ago
Rupee has gone financially very weaker against the u.s dollar once it was dropped till 67 $ also it was the greatest downfall of rupee in”>financial terms.
8 years ago
Rupee has gone financially very weaker against the u.s dollar once it was dropped till 67 $ also it was the greatest downfall of rupee in”>financial terms.
Dr Anantha K Ramdas
8 years ago
Mr Vinay Joshi:

Due to your letters, covering many issues that only Government can answer, I am battered and bruised and hospitalized. I hope to recover soon but thanks to Mr Nagesh Kini's balm, I am able to give you some answers to clarify some that you have raised.

In the recent weeks when I wrote on these subjects, you will appreciate my personal feelings are against uncontrolled and reckless import by one and all because of this newly found freedom. It is in this sense I have used the expression open general license. Your point on this is therefore well taken.

I am not a China basher; at one time I had an office in Hong Kong and also traded with them. More often than not their export prices were almost the same as the cost of raw materials at international prices. It did not make any economic sensse, but they relentlessly exported to get "recognition" and "acceptance" in the oversea markets. In those days their workers had to produce the required good in factories, or "else"! You might turn round and say "that this is their problem or internal policy". Yes, it is so, but even then it was affect our exports from India of the company we were getting our supplies. We had to safe guard our Indian interests and still be in the market.

Now the situation is no better; I do not know where you life but if you take a trip to the market place to buy various consumer durables, such as electronic items, toys of all kinds including dolls for kids, school stationery, and even items like keychains, umbrellas etc you will all these came from China at cheap prices. Of course the importer and shopkeeper made a profit. Do you believe that India didnot make these before and cannot make them now? Freeing imports does not mean you and I can throttle and kill our domestic industry.

This does not mean that we should stop imports from China or any other country. By all means, import what we must, sometimes, for expediency and urgency but if you have domestic suppliers, let's do what it takes to increase our production facilities and capacities. If China givess cheap long term credits, let the Government direct the Banks to match or better these offers. Thankfully, just as I write this the EgOM has now mandated that for UMPP indegenous supplies should be obtained. We must now await more details on this score.

As for Gold, opinions and perceptions may differ, but I am constrained to observe that gold is a non-productive investment. Yet we Indians are always in love in jewellery from time immemorial, and I would reckon that every middle class family has probably a kilo of gold in some form or other.

I am aware of the gold import rules of 80/20. While the Banks officially import gold and sell to the public, can we imagine how transaction takes place? Locally, the buyer pays cash in rupees and I believe all that one needs is an ID and Pancard. Anyway, when we buy gold in bars or in coins, our intentions are to make jewellery for the family; sometimes we do immediately and at other times, we dont. Our gold holdings are in millions of homes apart from millions of others who wear them in jewellery form in person. These are not in Fort Knox and not in 14ct (or 16 ct) in most other countries.

Now take the issue of Rupee depreciation. Every country tries to export more and import less to have a healthy BOP. China is the world's biggest moneylender today! USA and Japan are in great debt. Should we also follow them?

Our Reserves are reasonably healthy and at present rate of imports, will last for a few months. This is not good enough and what we need to do is to either control imports (or reduce them, if possible) or go about import substitution.

Since our fuel bills are substantial, what we have to do is to eliminate the stumbling blocks and environmental clearances - all made by our own bureacratic babus - and ensure that we do everything we can to increase our production of oil, gas, mine more coal, generate more power. In effect we need to put our house in order to overcome the difficulties.

Your suggestions are most welcome as to how all of us can help to tackle these issues. Many pertinent points that you have raised, we need to direct them to the Ministries concerned and generate public opinion so that officials who are in power can do their best to rectify them.

Thanks for the interest you have shown. Regards
Vinay Joshi
Replied to Dr Anantha K Ramdas comment 8 years ago
Dear Dr. Anantha K Ramdas,

In the first place I thank you for summarising my 4/4 posts to you.

Are you averse to state that ‘a view’ CAN’T have ‘a counter view’?
[yes as long as it’s within the defined parameters of the subject.]

Had you read my 1/4 & answered it you could have got the clue for 2/4 & on TO PUT UP your well accepted thought points. As it was accepted by me hence the counter view posted.

[Re. EPC’s viz EEPC & Pharmexcil, even asked Indian Missions trade desk to give real time info. In EEPC monthly journal several overseas project info used to be published - by the time Indian participants approach the project authority it use to be too late to submit proposals. – LET US NOT SKIRT ISSUE ON THE 4/4 ASPECTS. This is to state that I’ve always had highest regards for EPC’s & notably the Missions & overseas EPC’s office personnel.]

Ok. I’ve noted with due diligence your valued reply to me & I’ll answer as under each para of your post.

 FYI OGL referred to App 6, [restrictive trade policy & tariff barriers] ok, BUT after GATT to WTO free trade policy CTH-BTN to CCCN Brussels, ten digit HS code. Hence your comment under WTO would have been well acclaimed.

 Re PRC - From where Apple gets its products & why to distribute it worldwide? Why were there prices lower? How could they make quality products with lowest prices? In one reply I had stated that not a single lingerie is mfgd in US. Certain PRC co’s are world’s biggest mfgrs of raw material or be it other finished products. 80%-90% of worlds imports of those finished products.

 WHY? WHAT IS RELENTLESS EXPORT? WHY CAN’T INDIA DO IT? WHY PRC HAS BUILT US$ 3.5+TRN IN RESERVES? It’s no question of PRC bashing, I’ve myself as third party export under WHO project & CIS project authority executed CHEAPER from Ningbo, against 2.5x gate prices of India, forget India FOB. Oppressed labour market was in 80’s, today many PRC co’s have invested in Hanoi for cheap labour. Actually you were wrong in expressing it – viz why tariff measures such as ‘anti dumping’, or ‘fixed assessable value’, should NOT HAVE been imposed on unworthy imports as well highlighting ‘material injury’ to domestic industry. YOU HAVE NOT QUESTIONED WHY PRC HAS FIXED [but variable with 3%] EXCHANGE RATE? Such aspects give more credence to writing instead of STATING ‘CHINESE ECONOMIC WARFARE’!? They have kept it against world pressure & today QE3 tapering has nothing to do with them. If they liquidate their 3.5trn it will be global havoc.
The above answers you up to your gold para.

 Of course ‘gold’, unproductive investment! Why this question surfaces now? Why it was not there ten years/ one year back? Possessing a kg – so called family silver, is not purchased by middle class to the extent – ‘grandmas’ gold is passed on. Will you now answer me on rampant gold imports & hoarding? Therein was asked to state by me analytical imports data. [this aspect I’ve been putting in this forum since gold escalation but drop in int’l prices. WHICH SO CALLED MIDDLE CLASS FAMILY will by bar [unless windfall gain] & traditionally investing in silver/gold coins with deities embossed is a norm BUT today coins are not collateral for ‘gold’ loans. Lets finish this topic. 80:20 is not going to make any difference. There have to be ‘knocks’ instead of ‘Knox’, by the machinery.

 Re Rupee – Since May 22, my foremost stand was QE3 tapering & then ‘rampant speculation, today US$ has strengthened across currency basket be it CAD+ countries on sentiments & being world currency, the printing press are overworked. In the first place our internal borrowing by states & FORCED ISSUE of RBI Bonds for Govt. borrowing a great factor w/o curbing inflation neither growth sustained.

 Let us be apolitical but all natural resources mining is a SCAM. RIL says it finds shale gas in US it can keep & sell at market prices but it’s a REGULATED MARKET & with dominant price mechanism they will face antitrust laws as well billions in compensation.

 But today the same RIL in India with its gold plating of a/cs can dictate the Govt.

 WHAT IS FLAWED IS OUR NELP! As well UMPP aspects suited for chosen beneficiaries. Exactly we have to put our house in order & ensure transparency.

 Since 1947, Independence, we are still promising the ‘REPUBLIC OF INDIA’ [hardly any politician knows the meaning of ‘Republic’ or can define it]‘ROTI’, ‘KAPDA’ ‘MAKAN’, & ‘SADAK’ ‘PANI’ ‘BIJLEE’!

 Today we have to strengthen our fourth estate & third estate. Its pertinent to put down JAC [judicial appointment bill]apart from RTI & countering amendments to the twin judgments of apex court re. criminals in legislative functions.

Dear Dr. Ramdas, because of your explicit views on issues in this forum [as earlier also over the period] they resound the inefficient governance at all levels & appreciate them.

In this same forum I haven’t hesitated to state the rule of ‘oligarchs’, ‘nepotism’, ‘plutocracy’, in a dysfunctional state called ‘democratic’!? I’ve even further stated ‘anarchic functional’! If I can quote the Chairman of Rajyasabha, the Hon’ VP, Mr. Hamid Ansari, who asked from the Chair ‘is it an anarchic federation’!?

To sum it up the meltdown of our economy is coz of viciously self interested decision makers policies & of course short sightedness. [many believe Dr.MMS in ’91 as FM ushered in liberalization but before he could present his said budget proposals, the then PM, Mr.N.Rao, announced Industrial policy, SCRAPPING licenses in many industries, raising foreign equity to 51% which cleared the way. [I have highest respects for economist PM Dr.MMS, but when de-facto PM dictates he is at a loss.]

Do not resort to 70’s socialism & that small arms measures are over deriding the economy, the nations interest to pursue power. The world is looking BUT eventually INDIA will pass thro to be reckoned.

Dr.Ramdas, many thanks again & read all my posts between the lines & in no way intended to disparage whatsoever or writing. We are only debating in true earnestness the governance.

Vinay Joshi
8 years ago
Mr.A.K Ramdas,

I’m replying to your fourth post & that my earlier three posts are not replied by you is a sad commentary as the authour can’t reply. So is the case with one Mr.Vivek Sharma advising to invest in G-Secs!?

To start with your opening para – WITH WHOM do we have long-term supply agreements & contracts?

Please can you state the defined contracts & the details? PLEASE STATE!

In your first episode you had stated that Chinese economic warfare resultant, now coming to oil there is also foreign hand as IG use to say.
In FY 04 we were CAD+!? [10.45$bn]

Yes today crude oil imports are 32%+ of total imports, in FY04 imports were 90+mmt & FY12 172mmt! [imports approx 2x remittances 12x]. WHAT HAS HAPPENED TO NELP? Why you can’t talk straight perspectives?

On INR slide, as you are hearing me for the first time, since May 22, I’ve been vehemently putting in this forum to all authours, that apart from FED – SPECULATION is rampant THE MAIN COZ tho’ putting it with names.

Today I STAND VINDICATED AS RBI in it’s annual report & suggested to Govt. to investigate NDF/NDO – overseas futures by front co’s which forms MASSIVE 50% of the segment traded volume! OK!

Ms. Sucheta, can you ask your all authors [of the subject] to reply on the speculation aspects put by me May 22, onwards & further more ‘gold hoarding’.!

Will you, your authors, this forum REMEMBER I talking in May’13, QE3 tapering by 20bn$ Sept’13!? [of that aspect, jury still out but I had put up.] --- SO THE JITTERS!?

Mr.A.K Ramdas what are the assurances from RBI? Exemplify & it’s impact.

Mr.Ramdas, in reply to your second episode I had ridiculed the idea of selling gold – AN IDIOTIC AN IDEA – whosoever IDIOT may have stated it but was absurd to have been put.

You only rationally answer me -- What is the gold in stock? How much can be sold? [Explain quantum!] If you observe COMEX – Gold 200 DMA it has just moved up by 0.16%. 23rd its 11 week high at 1397.75 on Comex on bet that US housing data sluggish. What will be the cost of shipping & insurance? AIR FREIGHT!? NET RETURNS!?

AND THEN IMPORT THE SAME GOLD [as imports not banned] AT HIGHER PRICES TO MEET EXPORT & DOMESTIC DEMAND!? See the fallacy in you stating it.

This is like ‘onions’, exported & now same to be imported. [no NAFED details are yet with me but bidders first consignment should have arrived.]

Mr.Ramdas no steps can be initiated to curb oil imports & consumption?

You have travelled round the world – where in developing world 87% passenger transport & 65% freight resp; by road? Why? Why rail infrastructure augmentation & operational efficiency a far cry? This results in pre exports & post imports significant costs. Oblivious to it?

What has prevented Cairn India in increasing its production capacity? Exemplify.
What has prevented RIL in increasing its production capacity?


The corporate subsidy is about 5.4trnINR against fiscal deficit of approx 5.70 FY13.

GSPCL if it distributes piped gas then who will be there for YOUR ‘AADHAR CARD’? To get direct benefit transfer on LPG subsidy?

Conduct forensic audit of RIL on its oil exploration & the CAG enquiry into OilMin price increase AS WELL PUBLIC AWARENESS ON WEIGHTED AVERAGE PRICING AS RECOMMENDED!?

Iran barter! AGAINST WHAT? Pl state. Do you have slightest idea about Re-Insurance? Why OPEC countries should agree for barter & what can be exported to them?
For last 8/10 days Iran has held SCI tanker sailing from Iraq & demanding $1mn for release.
Flimsy grounds of polluting.

If you want to talk on COALGATE I’ll have to write a min of 15/20 pages.
Why Coal India coal is not quality coal? [I’m not going into the coal standards.]
Why it can’t meet its production target?
Why earlier UMPP’s were REQUIRED to manage their own fuel source?
Why Tata’s petitioned against RPower re award of contract? Post bid Rpower could import & sell & use alternative supply. Why all UMPP’s not on stream?
Why Adani Power granted 4yrs after tariff hike?
Why MERC granted 8-18% hike to RInfra [upto 100 units & 100-300 resp] & commercial tariff lowered?


Aug 23, new bidding terms for UMPP’s by EGoM are announced. Gas supply status quo maintained. April’14 gas hike remains unchallenged.

We import edible oil & pulses – 2% & 0.35% of total imports resp FY13, but in last decade e/oil imports doubled & that of pulses 2-1/2 times whereas wheat & rise rot in FCI silos.

Every Ministry is a power center by itself who GOVERN its fiefdom!
So what serious measures are you talking? The Govt has to be in power by oppression or suppression, appeasing & divisive politics.

Mr.Ramdas, so this 4/4 you will answer. Await.

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