The Fed's announcement to cut monthly bond purchases by US$ 10 billion in January amid improved economic outlook in the US, finally puts an end to the speculation surrounding the timing of tapering. "India is now definitely in a better position to manage its balance of payments as the Government and RBI has taken effective steps to build up forex reserves and render stability to the foreign exchange market", said Ms. Naina Lal Kidwai, President, FICCI.
“The recent trends in our trade and current account data clearly indicate that CAD for this fiscal would narrow down to less than US$ 50 billion, well within sustainable limits. Regular policy interventions are in-fact required for curbing imports of indigenously available resources and economizing imports of oil through conservation plans and push to domestic production to improve our trade balance over the long term.” noted Ms. Kidwai.
Kidwai said, “Further, we cannot disregard the possibility of turbulence in the FIIs market as seen earlier this year. The need for strengthening our domestic financial institutions has to be re-emphasised. The capital markets have to be made more deep and efficient to attract long-term investments and reduce the risk of volatility in capital flows.”