Ministry of Finance has decided that a team of senior officials will hold bilateral meetings with foreign jurisdictions to quicken the recovery of black money. The ministry took this decision after consulting with the Special Investigation Team set up to investigate on the black money issue.
A senior official of the Finance Ministry told PTI, “The step is aimed to cut down on the time taken in paper-based documentation and communication in cases of illegal funds stashed abroad.”
“A team of senior officials drawn from the Ministry and its various field formations will hold meetings and put across requests related to probe in these cases right on the discussion table. The required sanctions in this regard have been obtained from the government,” he added.
PTI reported that a note prepared by the Central Board of Direct Taxes stated, “These bilateral meetings will help India in making targeted and specific requests for information and to understand the problems, if any, which prevent them in providing the information, and to examine how the same can be addressed.”
Reportedly, three such meetings have already taken place and about half-a-dozen more are lined up this year, including one with the European Union.
According to PTI, as a part of the measures to deal with the black money issue, investigators have also received a new dossier on tax-related business information on about a dozen entities whose names were reported by an international group of investigative journalists sometime back.
A strong inflow of foreign funds and benign oil prices have strengthened the Indian currency but what has worked best for the rupee is the fading impact of war hysteria. Experts now see a chance for the RBI to recoup the reserves it spent in 2018 defending the rupee.
Putting a number to this, Gurang Somaiya, currency analyst at Motilal Oswal, said: “It is possible that RBI may limit some of the appreciation and recoup some of its lost reserves… but it may only come if the rupee strengthens to around Rs 68.20 a dollar.”
Explaining the factors at play, Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, said: “Post-Abhinandan (shooting down of the IAF pilot), geopolitical risk has subsided which has boosted investor sentiments.”
Banerjee added that the gains of the rupee will help the Reserve Bank of India recoup reserves which it lost last year in a bid to arrest its fall.
“The rupee appreciated and closed at 70.14 for the last week on the back of strong flows and fading impact of war hysteria,” said Sajal Gupta, Head Forex and Rates, Edelweiss Securities.
In addition, Gupta said that some “big flows are lined up next week. Maybe Arcelor Mittal money can hit the Indian markets which can lead to some more appreciation towards 69.50 unless the RBI intervenes”.
However, the rising dollar index is causing nervousness and any breakout may lead to a reversal in the rupee’s trend, said Gupta. Somaiya said that RBI may choose not to intervene as the central bank’s prime aim was to arrest volatility.
“Yes the rupee is inching below the 70-a-dollar mark but then the (general) election can cause massive volatility. Also, it is seen that a lot of central banks are getting into a dovish stance owing to the fears of global slowdown.”
The RBI had to stop the slump in the rupee late last year after it touched an all-time high of 74.47 on October 11 following the rising crude oil prices.
The Brent Crude touched $86-a-barrel mark in early October but started to ease following the US decision to exempt 8 countries, including India and China, to continue buying oil for six months from Iran despite sanctions.
The decline in crude oil, which accounts for a large import bill for India, directly affects the exchange rates.
A major factor supporting the rupee is the strong prospect of better fund flows from abroad.
“Inflows into India have clearly turned positive since the end of January. The flows in February at Rs 17,720 crore is the highest since November 2017. The trigger for this inflows is the dovish statement that came from the Fed at the end of January,” said V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
India’s foreign exchange reserves stood at $401.78 billion as against $393.13 billion in November last year. As the data suggests, with improving macros, the forex is already on the recovery path. (IANS)