........... Importantly, Chidambaram promised to addressed the twin deficits and said the ‘red line’ of 4.8 percent for the fiscal deficit of FY14 would not be breached under any circumstances. The FM’s comments came a day after the RBI undertook its first quarter review of the Annual Policy for 2013-14, where the central bank stood its ground and refused to buckle under pressure and effect any cut in key rates, and also pointed to the CAD as a “daunting structural risk factor” which had been well above the sustainable level of 2.5 percent of GDP for three years in a row. In fact, RBI also stressed on the need for the government to seize the opportunity created by the RBI’s mid-July liquidity tightening moves to stem the rupee slide and put in place policies to bring CAD down to sustainable levels.........
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