In a bid to tame ballooning current account deficit, the government is exploring ways to reduce imports and incentivise exports, said India's Chief Economic Adviser Raghuram Rajan on Tuesday in New Delhi.
Even as the RBI does what it needs to do, the government is exploring ways to reduce the Current Account Deficit (CAD), including measures to reduce imports and measures to incentivize or expand exports, Rajan was quoted as saying by an official press statement.
He emphasized that CAD will be brought down this year.
"Consequently, we believe the CAD will be brought down significantly this fiscal year regardless of the growth of the outside world. Of course, if growth picks-up more strongly in US,UK or elsewhere, our CAD will also come down faster," he added.
Welcoming RBI's decision to leave policy rates on hold in its monetary policy review earlier in the day, the Chief Economic Adviser viewed that the central bank and the government are on the same page and working together to achieve stability and growth.
RBI Tuesday left all key policy rates unchanged with the objective of keeping the currency markets calm and mindful of the sharp depreciation of the rupee in recent weeks, while conceding that risks to growth have increased and retail inflation remains high.
Turning to the capital account, Rajan said that the government has already taken some steps on liberalizing FDI, and also exploring some other options for stably and sustainable funding the CAD.
"We will announce specific measures in the next few weeks," he added.