Sridhar Krishnaswami / PTI
Washington: Finance Minister P Chidambaram has said if the package offered to exporters in the wake of the appreciation of the rupee is not sufficient, the government would think of ways to help them tide over the rest of the year.
“Exporters have been taken by surprise. We offered them a package a couple of months ago but if that is not adequate then we would have to think of ways and means by which they can be given a helping hand to tide over the rest of the year,” Chidambaram told PTI.
“But in the medium to the long run, exporters would have to learn to hedge to reprice their export contracts in tune with exchange rates,” the Finance Minister said.
Chidambaram would not answer the query if the government was thinking of intervening to buy American dollars so as to get over this situation.
“Monetary policy is the province of the Reserve Bank. Even if I give advice, which I rarely do, I would give it privately to the Governor (of RBI),” the Minister added.
Chidambaram was on a brief visit to Washington from New York yesterday (25 September). During the course of the trip, the Minister had a luncheon meeting with Treasury Secretary Henry Paulson and addressed the Peterson Institute for International Economics. He left Washington for New York later in the evening.
He maintained that his meeting with the US Treasury Secretary was a general review of matters.
“We talked about the IMF’s Report on the Outlook for the World Economy; he explained to me about the sub-prime mortgage crisis; we discussed some issues relating to the IMF Quota Voice reform and then his (Paulson’s) forthcoming visit to India,“ Chidambaram said.
The subprime mortgage crisis in the United States does not have an impact on India “because there is no Indian Bank, to the best of my knowledge, which has exposure in subprime mortgage markets,” Chidambaram said.
Asked to comment on the issue of increasing the number of Indian banks in the US, the Minister said this was discussed at the Indo-US CEOs Forum in New York and this is a matter of the US Federal Reserve.
“I think they have taken our concerns on board.”
India, the Minister said, would not like the growth in the world to slow down -- the IMF puts the world growth in 2007 at 5.2 per cent and predicts this will slow down to 4.9 per cent next year.
“If the world output is very high and the economy were to grow at a faster rate, that is good for India. It is good for India’s exports, good for India’s services and good for India’s tourism. But world growth at 5% of so — give or take a decimal point — it is quite acceptable; it is quite satisfactory,” Chidambaram said.