New Delhi: The RSS-affiliated Swadeshi Jagran Manch (SJM) has blamed the rupee’s record low on Foreign Institutional Investors (FIIs), but termed it a short-term crisis.
Speaking to News18, SJM national co-convener Ashwani Mahajan said the fall in currency is a global phenomenon and that most of the currencies are depreciating the world over. The rupee’s falling fortune is a “short-term crisis because of FIIs”, he said.
The rupee had on Thursday breached the 69-mark against the US dollar for the first time due to multiple headwinds like weak global cues and inflation concerns. It finally ended at an all-time low of 68.79, slumping 18 paise.
“The currency is depreciating while our foreign exchange reserves are booming. It is a contradiction. To stabilise the rupee value, buffer stock within the foreign exchange reserves, especially earmarked for FIIs, should be created. The RBI should at least keep the buffer stock,” Mahajan said.
He suggested imposing the Tobin Tax on FIIs. Tobin Tax is a proposed tax on international financial transactions, especially speculative currency exchange transactions, on FIIs. It is said to be useful in the long run and helpful in avoiding short-term currency crisis.
“The FIIs ask for concessions like tax relief etc. My feeling is that the government should think of imposing Tobin Tax in the long run so that there is disincentive to take away the foreign exchange,” he added.
Calling them “fly by night people”, Mahajan suggested a lock-in period for FIIs, preferably for three years. “They come for business, not to oblige us. We should make our policy stronger because FIIs lead to such short-term currency crisis,” he said.
On balancing out the impact of oil prices, Mahajan said the government is on the right track, with advance buying. “But the RBI has to intervene to avoid the short-term crisis,” he said.
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