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07-Aug2018

Widening CAD makes Indian rupee worst among its Asian peers: Kaushik Basu

Former chief economic advisor, Kaushik Basu has said that in the event of US-China currency war there will be a sideline effect on India and a depreciation of the rupee, which, if managed well by policymakers, will be good for the country. He also said that the rupee is over-valued and the fair value of the local currency is 70-71 to a greenback. He added that the widening current account deficit (CAD) and higher interest rates have made the rupee the worst among its Asian peers so far this year.

He said 'Our exchange rate has tended to appreciate in the past couple of years as we are inflating faster than the industrialised countries. Barring the correction that has taken place in the past few months, the rupee has been appreciating. The right level for the rupee is 70-71 to the dollar.'

Basu also said that India's method of computing its ease of doing business ranking was not entirely accurate. He further said of the 30 places jump, more than half was due to change in criteria of World Bank's calculation and added that a part of the jump in rankings was also because of the measure India has undertaken.

Kaushik Basu , the former chief economist of the World Bank, also raised concerns over the jobs market saying the poor employment growth is a matter of concern. Jobs data is very poor in the country. A part of it is legitimate as so much of work is very different work from what one get in the West.


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