Finance minister Arun Jaitley on Friday night announced a series of measures to boost market confidence, curb the widening current account deficit and stabilize the rupee after a marathon meeting with Prime Minister Narendra Modi to discuss the nation's economy.
Jaitley said five decisions have been taken to address the issue of the current account deficit, which touched 2.4% of gross domestic product in the June quarter. Mandatory hedging conditions for infrastructure loans through the external commercial borrowing (ECB) route will be reviewed and a 20% exposure limit on investments by foreign portfolio investors in debt to a single corporate group will be removed.
Government will permit the manufacturing sector to access ECBs up to $50 million with residual maturity of one year instead of three years. Masala bonds will be exempted from withholding tax this financial year and Indian banks will be allowed to become market makers in masala bonds including by underwriting.
In addition, "government will take efforts to reduce non-essential imports," Jaitley said against the backdrop of India's rising trade deficit which stood at $17.4 billion in August.(Source : Mint)