Finance minister Nirmala Sitharaman has continued to trot out the old shibboleths when asked whether the Modi government intended to adopt measures to prop up a floundering rupee – and failed to see its double standards on private cryptocurrency in the face of persistent calls from the Reserve Bank of India for an immediate ban on trading in Bitcoins and other virtual digital assets.
Sitharaman faced pointed questions from legislators on the two big issues on the first day of what promises to be another turbulent monsoon session but continued to waffle in her replies. The rupee has been badly roiled in the past few months and the legislators were trying to determine whether the government had any resolve to check the alarming 7 per cent decline in the exchange value of the rupee against the US dollar from the start of this year.
Sitharaman stuck to the Modi regime’s stance that a decline in the value of the rupee was actually good for the economy as it could spur exports – a specious argument that previous administrations have also made without being able to buttress it with credible statistics.
The finance minister also refused to spell out whether the government intended to ban transactions in private crypto currencies that continue in a grey area of little regulation from which the government reaps taxes. “Global factors such as the Russia-Ukraine conflict, soaring crude oil prices and tightening of global financial conditions are the major reasons for the weakening of the Indian rupee against the US dollar,” Sitharaman said in a written reply to a query in the Lok Sabha.
“In view of the concerns expressed by the RBI on the destabilising effect of cryptocurrencies on the monetary and fiscal stability of a country, the RBI has recommended for framing of legislation on this sector. The RBI is of the view that cryptocurrencies should be prohibited,” the finance minister said in a response. “Cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage. Therefore any legislation for regulation or for banning can be effective only after significant international collaboration,” Sitharaman said in her reply.
The rupee on Monday came close to the 80 mark when it settled at 79.98 — a fresh record low as crude oil remained firm over the $100 per barrel mark. At the inter-bank forex market, the currency opened steady at 79.76 but came under pressure It hit a low of 79.9825 and later ended at 79.98.