Well, RBI has managed to get around USD 5.6 billion under the foreign exchange deposit scheme aimed at Non Resident Indians (NRIs) so far. Once again our fellow citizens working abroad came to rescue India from the foreign exchange brink a la 1998 and 2001. It is expected to swell further as concessional scheme is available till November 30, 2013 ,wherein RBI is providing insurance against foreign exchange fluctuation till maturity of the deposit. This is a win-win situation for every stakeholder be it depositor, bank or the RBI.
However, the real rub lies in the fact that it merely provide breathing space before policymakers come out with reform to attract foreign exchange capital as well as control the unwanted imports. Alas, since the inception of current crisis, the entire energy is focused on the financing the bloated Current Account Deficit ( CAD).
Now one should realize that after getting the lifeline from NRIs, there are no more such lines exist or else we have to tap IMF or to activate bilateral swap agreement with Japan to get precious foreign exchange. Well, all such events would trigger unpleasant scenarios, showing lack of our resolve to bring down CAD to sustainable level and may risk losing our Investment Grade credit rating eventually.
Though our faith in the policymakers remains firm that they will devise ways to overcome current financial crisis, however, recent episodes have shaken our confidence a bit. Since the onset of global financial crisis in 2008, our economic resilience as well as tolerance has gone down. Gone are the days when government has always been vigilant to price rise Now a days, our response to current crisis is also piecemeal in nature, delayed and lacked coordination amongst set of policymakers. Thus due to lack of permanent solution, the current situation will keep linger on though intensity may come down.
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