Commerce and Industry Minister Suresh Prabhu, headed an an inter-ministerial panel, that suggested the finance ministry and the Reserve Bank of India (RBI) to explore renminbi-rupee trade with China, with which India had a massive trade deficit of USD 63 billion in 2017-18.
The RBI and the DEA were also asked to promote gold related schemes – such as monetization, sovereign bonds and coins – and address existing shortcomings to trim imports of the precious metal, by the panel which discussed measures to reduce imports and promote exports to achieve better trade and current account balance.
Whereas, the panel suggested arrangements like deferred payment or increasing barter system with Russia need to be considered to improve trade balance in diamonds from that country.
Meeting chaired by Prabhu, was part of the government’s efforts to reduce the damaging impact of trade imbalance on the CAD, which, in turn, is blamed for the sharp depreciation of the rupee in recent months, among other factors.
The weak rupee, coupled with a rise in global crude oil prices, added to the country’s import bill in recent months and widened the trade and current account deficits.
The rupee has emerged as the worst-performing Asian currency, having shed over 13 per cent in 2018.
Prabhu has also asked the RBI and the Department of Economic Affairs (DEA) to assess the feasibility of “rupee/barter” trade in crude oil with countries like Iran, Venezuela and Russia.