Will the PM Walk the Talk?

And the difficulty on the government to develop ways to sustain the rupee is all the more difficult, given the announcements by the Reserve Bank of India turned out to be a damp squib. “Pranab Mukherjee inflated the market’s hopes that he’d take bold measures to boost investor confidence, but came up with a few small tweaks – on his last day as finance minister,” as quoted in Reuters.

The government has to think up of measures that will be a focus for long-term foreign direct investments, not foreign investor inflows that are short term in nature. The Prime Minister’s comments have come at an apt time. Over the last one week, there have been two multinational companies which have evinced interest in investing in India – Ikea and Coca-Cola.

The comments from Manmohan Singh give an indication that the government has the issue on its mind. The Prime Minister said to the finance ministry officials, “On the external front, I am concerned about the way the exchange rate is going. Investor sentiment is down and capital flows are drying up.”

Though it sounds serious, the question is when he will act on this statement. Reports are already signifying that any action on diesel price is likely only after the presidential polls. So the wait is likely to get longer. Fingers Crossed!