New Delhi, Feb 3 (PTI): Finance Minister Nirmala Sitharaman has reiterated that the value of the Indian rupee is determined by market forces and not subject to devaluation, a characteristic of a fixed exchange rate regime. Her statement comes as the rupee hit an all-time low of 87.29 per US dollar on Monday amid recent weeks of decline.
In a written reply to the Lok Sabha, Sitharaman clarified that the exchange rate of the rupee is influenced by multiple factors, including the Dollar Index movement, capital flows, interest rate trends, crude oil prices, and the current account deficit. She emphasized that India does not maintain a fixed exchange rate system, and hence, there has been no deliberate devaluation of the rupee.
"The value of the INR is market-determined, with no target or specific level or band," Sitharaman stated.
She further noted that while currency depreciation could enhance export competitiveness and positively impact the economy, it could also increase the cost of imported goods. However, she pointed out that the overall effect of currency depreciation on domestic inflation and consumer costs depends on various factors, including the pass-through of international commodity prices to the domestic market.
The minister also highlighted that import costs are influenced by several elements such as global demand-supply conditions, the nature of traded goods (essential or luxury items), freight charges, and the availability of substitutes. Consequently, the impact of exchange rate fluctuations on inflation and the cost of living cannot be analyzed in isolation, she added.
Sitharaman assured that India's exchange rate management approach remains stable and transparent, reinforcing that the rupee’s value is solely determined by market dynamics, without any targeted level or intervention.
Unclaimed Insurance Funds Decline to ₹21,718 Crore
In response to another query in the Lok Sabha, Sitharaman disclosed that unclaimed insurance funds with insurers stood at ₹21,718 crore as of March 2024, marking a decline from ₹23,699 crore in March 2023 and ₹25,403 crore in the previous year.She highlighted that the Insurance Regulatory and Development Authority of India (IRDAI) has implemented several measures to reduce unclaimed funds and improve policyholder awareness.
To ensure efficient and timely settlement of claims, IRDAI mandates insurers to clearly outline required documents for claim settlements and display related information on their websites for beneficiaries. Moreover, insurers cannot reject or close claims due to insufficient documents or delayed intimation.
Sitharaman also stated that insurers must pay interest at the bank rate plus 2% for delays in claim processing, and this interest must be paid automatically along with the claim amount, including unclaimed funds.
These regulatory measures aim to streamline the claim settlement process and ensure that policyholders and beneficiaries receive their rightful claims without undue delays.
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