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The nation’s currency has lost around 15 per cent against the dollar since May this year.
“The rupee has overshot its true level, it is undervalued. We have to be patient, be firm, do whatever is required to be done and rupee will find its appropriate level,” said the finance minister in New Delhi.
Mr Chidambaram said India is not immune to the turmoil that is unsettling all emerging markets currently on fears unleashed by the US federal Reserve’s comments about a policy reversal on fiscal stimulus.
“Every emerging market is challenged today. India is also challenged and the impact is also felt on the equity market as well as on the currency market,” he said.
The finance minister said he was confident that India’s fiscal deficit would be contained at 4.8 per cent of the GDP.
Critics have raised concerns about the massive subsidies that would now be implemented by the state for the world’s largest food subsidy programme that was passed by the lower house of the Indian Parliament late on Monday night.
“(Fiscal deficit of) 4.8 per cent of GDP and the absolute number indicated in the budget is a red line and the red line will not be breached. We have provided enough money for the cost of the food security programme for the remainder of the current fiscal,” he said.
“We think that after providing for the Food Bill we will still remain in the limit we have set for ourselves in the budget papers,” he added.
The national food security bill aims to provide subsidised food grain to around 800 million people.