Indian govt has no intention to restrict import of goods and commodities

The trade deficit in India has widened during recent months. Is there any move to curtail or restrict imports with a view to meet this challenge?

The Indian government has made it clear that it has no intention to restrict import of goods and commodities into India. The Reserve Bank of India has taken a decision to allow invoicing, payment and settlement of export dues in Indian currency with its trading partners. This is part of the larger strategy to respond speedily to the changing economic and geopolitical situation. The decision to use the rupee for trade among its partners has been taken in response to certain foreign countries tightening their monetary policies. Officials believe that this will help India’s trading partners to get a fair value for the rupee during a period of uncertainty, given that India has macro-economic stability and has been able to keep its fuel costs in check as a result of getting oil and other commodity imports at lower than market prices.

Senior citizens and fixed income earners are not getting enough return on bank deposits. This is despite the Reserve Bank increasing the rates. Is there any alternate form of investment which would give better yields than bank deposits?

The reason why banks are not increasing their interest rates on fixed deposits is that they are currently flushed with large amount of funds flowing in every day. Therefore, senior citizens and fixed income earners may consider investing in high yielding bonds. Yields on bonds are market driven and are currently giving a much higher return than bank deposits. For example, tax free bonds with seven year residual maturity are giving a tax-adjusted yield of nearly 8 per cent as compared to around 5.per cent per cent which senior citizens get from fixed deposits in banks. The bonds also provide a high level of security as Government securities carry a sovereign rating. Further, G-Secs have wider acceptance as collateral while taking loans. Government bonds, being risk free investments, ensure that proper portfolio diversification is made by the investor, which strategy should continue for a longer period of time.