The Prime Minister Dr. Manmohan Singh reviewed the sharp decline in rupee value and its impact on the economy with the RBI Governor D Subbarao and the Planning Commission Deputy Chairman Montek Singh Ahluwalia on Friday.The Chairman of Prime Minister's Economic Advisory Council (PMEAC) C Rangarajan also attended the meeting. Later, Mr. Rangarajan told media that they discussed measures to arrest the rupee fall. He also informed that overall situation of the economy was also discussed during the meeting. Attributing the rupee depreciation to mismatch between the current account deficit (CAD) and capital flows in the country, Mr. Rangarajan said, in the short-term the RBI should intervene to curb speculation as market over-reacts to the situation. He said, efforts should be made to reduce the CAD and should be pro-active in increasing the capital flows in the medium-term.
The Former RBI Governor favoured direct sale of dollars to oil marketing companies (OMCs) to ease pressure on the rupee.The oil firms buy dollars in large quantities to import crude from the international market. India's crude oil import bill was 155.6 billion US dollar in 2011-12.