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India can handle capital inflows even up to $75 billion: Montek
Applying balm to the recently acquired wounds of Indian exporters, the Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia, who is spearheading the G20 negotiations for India, said here today that India can handle capital inflows even up to $55-75 billion this year without having to let the rupee appreciate.
Capital inflows need not lead to appreciation necessarily, he said, and explained that since India was looking to finance a current account deficit of 3 per cent, he was personally quite happy to let the exchange rate be.
It would be a different matter if the surge was $100 billion, he added. He also said that if capital flows are excessive, we should learn to handle them. But he, nevertheless, ruled out further appreciation.
China has announced that it will consider capital controls in view of the latest US fiscal stimulus of $600 billion to avoid destablising capital inflows. India was in no hurry to do the same, he indicated.
Asked what India has gained from the G20, he said that one of the biggest benefits was that in the IMF pecking order, India had moved up from the 22nd rank to the eighth rank. This indicated improved clout.
On what was going at the G20, he said the drafts were being readied. He declined to answer a question on what the major areas of disagreement were.
The G20 is now discussing how to take international policy co-ordination called the Mutual Assessment Process, to a higher plane. He said it was not easy to coordinate policies because of domestic political considerations which made it difficult to make any agreement binding. There will not be any instantaneous results, he said.
On the suggestion made by the US Treasury Secretary, Mr Tim Geithner, that everyone should agree to a 4 per cent cap on current account deficits or surpluses, he said there was no formal proposal to that effect and that the G20 was not discussing it.
Mr Ahluwalia commended the Korean Government for bringing development on to the G20 agenda so that the concerns of the developing countries were also taken into consideration. Until now, the G20 was only focused on the problems of the rich countries. He pointed out that this was the first time that a G20 meeting was being held in a non-G-7 country.
On China and its exchange rate policy, he said that today the focus is on many things, not just exchange rates.
Korean news sources, meanwhile, are saying that organised labour unions are planning a march against the G20 on Thursday. They expect about 10,000 people to join the march. Such protests have now become standard fare whenever a major international economic meeting is held.
The Hindu Business Line : India can handle capital inflows even up to $75 billion: Montek
Applying balm to the recently acquired wounds of Indian exporters, the Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia, who is spearheading the G20 negotiations for India, said here today that India can handle capital inflows even up to $55-75 billion this year without having to let the rupee appreciate.
Capital inflows need not lead to appreciation necessarily, he said, and explained that since India was looking to finance a current account deficit of 3 per cent, he was personally quite happy to let the exchange rate be.
It would be a different matter if the surge was $100 billion, he added. He also said that if capital flows are excessive, we should learn to handle them. But he, nevertheless, ruled out further appreciation.
China has announced that it will consider capital controls in view of the latest US fiscal stimulus of $600 billion to avoid destablising capital inflows. India was in no hurry to do the same, he indicated.
Asked what India has gained from the G20, he said that one of the biggest benefits was that in the IMF pecking order, India had moved up from the 22nd rank to the eighth rank. This indicated improved clout.
On what was going at the G20, he said the drafts were being readied. He declined to answer a question on what the major areas of disagreement were.
The G20 is now discussing how to take international policy co-ordination called the Mutual Assessment Process, to a higher plane. He said it was not easy to coordinate policies because of domestic political considerations which made it difficult to make any agreement binding. There will not be any instantaneous results, he said.
On the suggestion made by the US Treasury Secretary, Mr Tim Geithner, that everyone should agree to a 4 per cent cap on current account deficits or surpluses, he said there was no formal proposal to that effect and that the G20 was not discussing it.
Mr Ahluwalia commended the Korean Government for bringing development on to the G20 agenda so that the concerns of the developing countries were also taken into consideration. Until now, the G20 was only focused on the problems of the rich countries. He pointed out that this was the first time that a G20 meeting was being held in a non-G-7 country.
On China and its exchange rate policy, he said that today the focus is on many things, not just exchange rates.
Korean news sources, meanwhile, are saying that organised labour unions are planning a march against the G20 on Thursday. They expect about 10,000 people to join the march. Such protests have now become standard fare whenever a major international economic meeting is held.
The Hindu Business Line : India can handle capital inflows even up to $75 billion: Montek