FinMin may hike ECB limit, import duty on luxury goods

After Reserve Bank of India annouced additional measure to stem the rupee slide on Thursday, the finance ministry is now likely to announce further measures for rupee shortly reports CNBC-TV18’s Aakansha Sethi.

The announcement could be as soon as today afternoon or latest by tomorrow because with the parliament on, the finance ministry cannot announce something on a day that the parliament is functioning.
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The finance ministry is considering several measures like a hike in external commercial borrowing (ECB) limits especially for rupee refinancing. There was a meeting in Mumbai on Wednesday on external commercial borrowings and its decision is likely to be part of these measures to boost the rupee.
Apart from this, the report on hiking import duties is also being submitted to the Finance Minister to look at the items on which import duties can be hiked. It is unlikely on intermediate goods such as coal because the government would not want to set off an inflationary spiral. High end electronic goods and luxury goods may also see a hike in duties.
If we look at the spilt up of imports, about USD 31 billion is on account of electronic goods. So, those which are not part of the I-T agreement of 1991 are likely to see a hike in import duty. Apart from this there could be steps in direction of quasi sovereign bonds issue.
We know that PSUs such as IIFCL, Power Finance Corporation (PFC) and Railway Finance have committed USD 1 billion, USD 2 billion and USD 1 billion respectively to raising funds in foreign markets. The finance ministry feels that cash rich PSUs can leverage cash to raise debt abroad and that is likely to be the third measure.
Apart from that, there could be more measures in the next two weeks which will include the government setting up a real estate investment trust but for now these three measures are yet to be announced.