Kolkata:  On the last day of UPA presidential nominee Pranab Mukherjee as the Union Finance Minister, the government is all set to make major announcements on Monday regarding economic measures in a bid to improve market conditions and accelerate the pace of economy.

"I think notifications are going to be issued. In morning I discussed (those) with Secretary, Economic Affaris (R Gopalan). They are going to issue circular...RBI is going to issue the circular," Mukherjee told reporters here.

He said that there were discussions with the RBI Governor D Subbarao also in this regard last week.

 

Rupee depreciation concerns Finance Minister

READ MORE
India's rating outlook stable: Moody's
Pranab likely to resign as FM today

The sharp decline in rupee against the US dollar is a cause of concern and there is expectation that steps would be announced to boost the domestic currency.

The rupee, however recovered 71 paise against the dollar at 56.44 in early trade on Monday on selling of American currency by banks amid expectations that RBI may announce steps to boost the local currency.

The economic growth has also fallen to a nine-year low of 6.5 percent in 2011-12 and industrial output continues to be sluggish with a mere 0.1 percent growth in April. Inflation too remained at an elevated level of 7.55 percent in May.

The measures would be announced on a day when global agency Moody's has retained outlook on India's rating at stable despite slowdown in GDP growth rate, saying that it is unlikely to be even a medium-term feature.

Notably, the central bank may take several revival measures in this direction that includes raising the interest for NRI deposits, cutting down wasteful expenditures and unveiling a bond issue for overseas investors to improve capital inflows in the wake of the rout in rupee.

S&P warns India of becoming 1st BRIC to lose investment grades

The international rating agency Standard & Poor's has also warned that India could become the first of the so-called BRIC economies to lose its investment-grade status, sending the rupee and stocks lower, less than two months after cutting its rating outlook for the country.

"Slowing GDP growth and political roadblocks to economic policymaking are just some of the factors pushing up the risk that India could lose its investment-grade rating," the ratings agency has said in a report dated June 8.

India's sovereign rating is BBB-, the lowest investment grade rating, and in April S&P lowered its outlook on the rating for Asia's third-largest economy to negative from stable.

April industrial output up by dismal 0.1 percent

Adding to the woes, India's industrial output growth slowed down sharply to 0.1 percent in April due to contraction in capital goods and dip in manufacturing output, reflecting the sluggish state of the economy.

However, rejecting the speculations of rate cut, the RBI had kept the key rates unchanged.

(Agencies)

Latest News  from Business News Desk