Capital inflows will not lead to rupee appreciation: Ahluwalia

11 Nov 2010

1

In a bid to allay fears of Indian exporters, the deputy chairman of the planning commission, Montek Singh Ahluwalia, who is spearheading the G20 negotiations for India, said yesterday in Seoul that India could handle capital inflows of even $55-75 billion this year without appreciation of the rupee.

Montek Singh Ahluwalia''Capital inflows need not lead to appreciation necessarily,'' he said, and explained that since India was looking to finance a current account deficit of 3 per cent, he was personally quite happy to let the exchange rate be.

''It would be a different matter if the surge was $100 billion,'' he added. He added that if ''capital flows are excessive, we should learn to handle them.''

Overall, Ahluwalia ruled out further appreciation of the rupee.

Though China has announced it would consider capital controls in view of the latest US fiscal stimulus of $600 billion to avoid destablising capital inflows, Ahluwalia said India was in no hurry to do the same.

Responding to a question as to what India had gained from the G20, he said one of the biggest gains was that India had moved up from the 22nd rank to the eighth rank in the IMF pecking order which pointed to India's increased clout in the emerging economic order.

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