RSS affiliate Swadeshi Jagaran Manch (SJM) has suggested that India should sign bilateral agreements with countries that would allow for rupee-denominated trade. The suggestion, part of a series of measures proposed to make the rupee a more widely accepted currency for international trade, came during the National Council Meeting of SJM held in Pune during the 3rd and 4th of June.
The organisation wanted India to make it easier for businesses to use the rupee for trade by providing more liquidity in the rupee market and making it easier for businesses to open rupee accounts. It wanted the government to encourage foreign investors to invest in Indian rupee-denominated assets. SJM proposed the development of a robust rupee-denominated bond market to provide businesses with a wider range of investment options and make it easier for them to raise capital in rupees.
Another suggestion made by SJM was to promote the use of the rupee in trade with neighbouring countries to reduce the need for India to use foreign currencies for trade with these countries. It also wanted India to work with other countries to develop a common framework for rupee-denominated trade to make it easier for businesses to trade in rupees with countries that do not have bilateral agreements with India.
"These steps would be a significant step towards reducing India's reliance on the dollar and could have a number of benefits for the Indian economy. By taking these steps, India can help to reduce its reliance on the dollar for international trade and payments. This would help to insulate the Indian economy from fluctuations in the value of the dollar and could also help to boost India's exports," Ashwani Mahajan, national co-convenor, SJM, said.
The Reserve Bank of India allowed settlement for import and export of goods and services in Indian Rupee in July, 2022 in the backdrop of the Ukraine and Russia war and US' sanctions on use of dollars for payments to Russia and Iran.
The Rashtriya Parishad of SJM congratulated the government for approving trade settlement in rupees and urged it to take steps to encourage more countries to use the rupee as a trade currency. However, it wanted no change in the government’s policy of restrictions on capital account convertibility. "It has proved to be a saviour in the international financial crisis in the past," Mahajan said.