The Food Security Bill will not have major impact on fiscal deficit or current account deficit (CAD) as the news was already discounted, believes Manoj Rane, managing director and fixed income & treasury-India, BNP Paribas.
The CAD issue has more to do with the weakening rupee, he added. Rane, in an interview to CNBC-TV18 said, there is a huge negative sentiment about high CAD countries like India and he expects the rupee to remain under pressure till the situation substantially changes.
Below is the edited transcript of Rane's interview to CNBC-TV18.
Q: How is rupee looking like, it opening so much do you think 65.55/USD, the prevailing high could be taken very easily?
A: When there is a negative momentum like this, how far it goes and for how long it stays is always a difficult call. Unfortunately, the current account deficit (CAD) countries have again seen fair amount of negativity this morning. I think it will remain under pressure till sentiment substantially changes.
Q: Is there further negativity because of the Food Security Act and things which might exacerbate fiscal deficit or do you think this is a global juggernaut and irrespective of domestic politics you are going to see the rupee fall?
A: This remains a global juggernaut but of course our problem is exacerbated by the fact that we are a fairly significantly negative CAD country. This issue is not going to get resolved in the next two-three months. I wouldn’t attribute so much to the Food Security Bill which anyway was expected possibly discounted. I think the other concerns on the CAD are far more from a currency perspective.