The Reserve Bank of India (RBI) governor, Mr R. N. Malhotra said here today that there will be no such thing as discreet devaluation. “No large devaluation of the rupee will take place”.
RBI, he said, was aware that exporters were delaying repatriation of export earnings into the country perhaps in the hope that there would be further reduction in the value of the rupee vis-à-vis foreign currencies. There was considerable evidence that there was a lag in receipts of export proceeds, he added.
The balance of payments position and the fiscal imbalances within the domestic economy were areas of real concern, particularly of exports in the first five months of 1990 had dipped to 22.5 per cent against 38.1 in the earlier year and inflation had touched 10.2 per cent in recent months. Imports had grown by 21.2 per cent upto August 1990 against 18.5 per cent last year, the governor observed and the trade deficit was widening.
HOPE FOR THE FUTURE: On the other hand, the economic scenario was not as gloomy as it was being projected by business and industry. Agriculture and industrial production was up and the situation was encouraging. Mr Malhotra said. There was, however, an urgent need to make sacrifices of profits in order to make up exports in the circumstances, he added.
The RBI governor emphasised that while there were bop difficulties it would be kept within limits and India would fully meet its external payments obligations.
COUNTER-PRODUCTIVE: Liberalisation of the economy could not be maintained unless exports were stepped up, Mr Malhotra said. He was of the view that it was counter-productive to restrict imports as it affected domestic productions and exports.