The finance ministry is looking at the NRI deposit scheme to encourage overseas Indians to invest in the country in a measure aimed to stabilise the falling rupee.
The rupee has been one of the worst-performing currencies in the emerging markets on persistent global headwinds and concerns on the macroeconomic front. Concerns over the widening trade deficit on the back of rising oil prices and the strengthening of the dollar have been consistently putting pressure on the rupee. The current account deficit (CAD) touched a five-year high of $15.8 billion during the first quarter, the Reserve Bank of India (RBI) reported on Friday.
"The government is worried about the falling rupee and will announce specific measures to arrest the rupee fall," a top government official told reporters.
This is the first time that the government has expressed concern about the declining rupee.
As the government looks at ways to boost direct foreign investments, "NRI deposit scheme is an option to contain the rupee depreciation. The government can go for the overseas borrowing scheme like this at a short notice," a top government official said.
The finance ministry and RBI are in touch, while the central bank is intervening in the currency market when required, said the government official further.
In 2013, the RBI had mobilised $26 billion through Foreign Currency Non-Resident Bank Account (FCNR-B) deposits that helped strengthen the rupee and stabilise the currency market.
As the rupee continues to fall, the government could tap NRIs, among other measures to plug the current account gap, the official said. The foreign exchange reserves were, however, at a comfortable level, the government said. The RBI has been selling dollars, though in a restrained manner, leading to a drop in India's foreign exchange reserves to $400 billion from a record high of $426 billion in mid-April.
The crude oil import bill for the country, which is the world's fastest-growing oil user, surged 76% in July from a year earlier, highlighting the rupee's vulnerability.
