Rupee crashed in early market trade and fast heading for 66 mark. While the share market took the Food Security Bill badly and down by nearly 2% , as the investor fears the ill timed political Food Security Bill , will increase hugely the fiscal deficit and will force Rupee to crash further to touch seventy in next few months, seriously hampering business environment, already down with negative IIP ; PMI and GDP growth, inviting fast downgrading from rating agencies.
Huge burden of fast rising under recoveries bill of oil companies will seriously effect fiscal deficit and CAD level, beyond control.
Reuters polled 17 economists, with a majority viewing that the currency will be the top priority for new RBI Governor Raghuram Rajan but the consensus showed it will likely weaken to 69 per dollar,implying a further 7 percent fall from Monday's spot rate of 64.10. It may turn out be tough tussle between economic expertise and judgement of RBI VS. New Delhi's political leadership, who will not be risking the danger of losing the throne of Delhi, without giving the populist dollies on the eve of election, irrespective of all other circumstances.
The substances of what the sum total of Reuters poll of 17 economists is as : With elections due in 2014, New Delhi's increasing inclination to newer subsidy programme, most recently the food security bill, could blow a hole into the country's weak finances -- one of the biggest causes of the rupee's thrashing, will make policymakers struggle hardest to find a way out to save the economy from collapsing more alike the Euro crisis.