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“Much of this was due to global markets reacting to the likelihood of a withdrawal of Quantitative Easing III by the US Federal Reserve Bank,” said the prime minister at the Associated Chambers of Commerce and Industry of India (ASSOCHAM) annual meeting.
Dr Singh assured businesses that the government is taking action to improve the economy.
“I know that business is deeply concerned about the slowdown in the economy.
“When things are going bad, as they seem to be at present, it is the responsibility of the government to become proactive,” said the prime minister.
The Indian rupee touched a lifetime low of 61.21 to a dollar earlier this month.
The prime minister said this was because of large amounts of funds being withdrawn from the market, which led to the rupee’s depreciation.
Dr Singh referred to other BRICS nations, Brazil and South Africa where similar “large volumes of funds were withdrawn”.
“The biggest concern is volatility of foreign exchange,” said the prime minister.
“We are committed to bringing down the current account deficit, from both demand and supply side,” he added.
In what could be a big boost to foreign investment in India and improve the dollar-rupee balance, the government announced raising FDI caps in various sectors earlier this week.
Indian Commerce Minister Anand Sharma said in New Delhi that FDI caps in telecom, defence and insurance had been hiked.
Dr Singh also urged Indian industries to become more competitive globally.
“It is because we are confident that it can that we have entered into Comprehensive Economic Partnership Agreement with the ASEAN countries as well as the Republic of Korea. We are hoping to conclude a similar agreement with the European Union soon.”
The BRICS Post