Editorial
Addressing the issues
India is the main focus of this edition of Treasury Today Asia. 2013 has not been kind to the tenth largest economy by nominal GDP and member of the exclusive BRIC circle. The Federal Reserve’s hint at unwinding quantitative easing (QE) early in the year caused the Indian rupee to fluctuate wildly; it hit an all-time low against the US dollar in August. This issue contains a special report on the causes and consequences of the rupee volatility, including an interview with the treasury team at Larsen & Toubro, a technology, engineering, construction and manufacturing company based in Mumbai.
After a protracted rocky patch, the Indian government stepped in to contain imports and placed restrictions on importing gold – both of which are methods to help narrow the country’s current account deficit. And its commitment to address structural issues is strong: in October, Indian Finance Minister Shri Chidambaram stated that the government was committed to the path of fiscal consolidation and aimed to bring the fiscal deficit down to 3% by 2016 to 2017.
Encouragingly, the trade deficit has narrowed in recent months, led by slower domestic demand, a weaker currency and policy steps to curb imports. These factors should help narrow the current account deficit this and next year. According to HSBC Global Research, it is important for the government to keep macroeconomic policies tight and step up the implementation of structural reform to further reduce vulnerabilities ahead of Fed tapering and make the current account deficit sustainable over the medium term.
In the Corporate View, Gunjan Dhawan, Treasurer at Hindustan Coca-Cola Beverages Private Limited, India, provides insight into the quick-changing Indian environment, as well as imparting his knowledge with regards to rolling out innovative cash, supply chain finance and risk management solutions. He is undoubtedly one of the new breed of corporate treasurers in India that are developing a more strategic and global approach to treasury.