Right value of rupee is 59-60 to a dollar: Chidambaram

Mumbai:Asserting that the right value ofrupee is 59-60 to a dollar, Finance Minister P Chidambaramtoday said that government will make all efforts, includingextending priority sector status to export credit, to boostshipments.

"We think that based on the REER (real effective exchangerate) value, that (59-60) is the right level of the rupee andit should not overshoot its mark.

P Chidambaram. PTI image

P Chidambaram. PTI image

"But even at 59-60, I think it is extremely competitive toexport to many markets," the Minister told a gathering ofexporters lobbies led by the Federation of Indian ExportersOrganisation here.

"I think the rupee has to find its level. We think thelevel, not only I, but a large number of people, think thatthe right level of the rupee is between 59 and 60. But that isnot something that I am willing to pronounce on.

The rupee, which had plunged to a life-time low of 68.85on August 28 against the dollar, today settled at 62.51, down44 paise from the previous close.

Speaking to the exporters on their their demand for"priority sector" treatment to export credit, he said hisministry supports this view and it is talking to the ReserveBank on the matter.

"The Ministry of Finance supports the idea that exportcredit should be put in the priority sector list, but it is amatter on which we are talking with the Reserve Bank,"Chidamabaram told a gathering of exporters lobbies led by theFederation of Indian Exporters Organisation (Fieo) here latethis afternoon.

Apart from the Minister, the high-level meeting wasattended by Commerce Secretary S R Rao, DGFT Anoop Pujari, andRevenue Secretary Sumit Bose, among others.

However, cautioning that there are some issues to beresolved before extending the priority sector lending (PSL) status to exporters, he said: "The fear is that if you putexport credit to the priority sector, some other elements ofthe priority sector may get affected. We are in talks with theRBI (to resolve this)."

Chidambaram also noted that the Padmanabhan committee (of the RBI) has already made a number of recommendations onexport credit, one is, of course, the cost of credit and thequantity of credit.

It can be noted that currently priority sector lendingwhich comes at a cheaper rate and that without much hassles,is limited to agriculture and allied sector lending and theMSME sector. The RBI mandates domestic banks to set aside asmuch as 42 per cent of their total loan book towards PSL.

When exporters complained that there is no level-playingfield for them when it comes to competing with China due tothe high cost of credit here, Chidambaram said, there cannotbe any comparison between the two nations as the two economiesare very different.

"It is simply not possible that the cost of money in Chinaand cost of money in our country will be the same. Interestrates cannot be equated, it's a factor cost. All factor costsall over the world are not the same.

"Interest rates are decided by the policy rates of theRBI, the cost of money to the banks and the bankers lendingrate, which is why the Commerce Ministry gives subvention tocertain sectors to make exports competitive," Chidambaram toldexporters.

On the issue of multiple taxes that exporters andmanufacturers face, the Minister said it cannot be helped asthat is the nature of the Federal system.

"The states can't collect taxes and so the Centre refund.When the GST comes, then it subsumes three taxes-- excise,service and VAT. Perhaps, there is a possibility that thethree taxes will be rebated for exporters. But we can't rebateyou other local taxes," he said.

On a request to roll back the recent duty implementationon export of iron ore, Chidambaram said: "The margins withwhich the segment works and the international prices are highand hence there is no issue of rolling back the duty."


Updated Date: Dec 20, 2014 23:17 PM

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