Overview
- Finance Minister Nirmala Sitharaman warned of a bundle of external and domestic risks, including volatile foreign exchange, rising crude and fertiliser prices, strained raw‑material imports and the prospect of a weaker monsoon, and said food supplies are secure because buffer stocks have been maintained.
- Sitharaman said on Monday that recent moves are only the start and that the government will take further steps to attract foreign capital to support the rupee and markets.
- Authorities have already introduced specific measures: tax relief for foreign investors in government securities, expansion of the Fully Accessible Route, an RBI swap facility for 3–5 year FCNR(B) deposits and a concessional forex swap window for PSUs raising external commercial borrowings.
- The RBI is bearing hedging costs for certain dollar deposits and swap windows through specified dates to lower banks’ currency risk, a step meant to reduce hedging costs and make overseas funding cheaper in the short term.
- Those policy steps aim to protect growth by stabilising reserves and borrowing costs, but higher shipping and insurance charges and fertiliser price swings could lift import bills, raise subsidy needs and put pressure on farmer incomes if rains are deficient.