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Prime Minister's US trip cancelled as there are not enough dollars

22, Aug 2013 By FP Editors

New Delhi. In a major embarrassment to Prime Minister Dr. Manmohan Singh, US President Barack Obama has cancelled the invitation extended to him to visit the White House on 27 September, sources told Faking News. Sources in the PMO declined to confirm or deny the story.

The White House has informed the PMO about the cancellation, but did not clearly indicate the reason behind the drastic step, the sources said.

However, it is learnt that the intimation about cancellation came soon after the Indian Prime Minister urged the US President to allow India to pay his travel costs in Rupees instead of Dollars.

The White House went into a tizzy, and tried to contact NRIs to see if they would fund the PM’s stay and his spouse’s shopping expenses, but not many NRIs seemed keen. A Gurdwara did offer to let the PM come to their langar, but the White House declined the invitation due to security reasons.

Barack Obama with Manmohan Singh
Good old times when India had enough dollars

Interestingly, the sources say, the embarrassing situation was precipitated by none other than Chief Economic Advisor Raghuram Rajan, whom the Prime Minister himself had endorsed as the next governor of the Reserve Bank of India.

“Rajan put his foot down and informed the PMO that there were not enough dollars with the RBI to fund foreign travels, even if it is that of the prime minister. Rajan felt that as the top political executive in the country, the PM should lead by example by conserving dollars,” the sources said.

India is witnessing an acute dollar shortage as foreign investors are frantically pulling out money from the sagging economy to invest in the US, where they think there are green shoots emerging. This has made the dollar scarce and pricey in India.

Economists are of the opinion that with just $278.6 billion in the RBI’s reserves—enough to cover just about 7 months of imports—Rajan’s move is in the right direction.

According to a recent report, the prime minister has spent Rs 642 crore on air travel abroad since 2004. As per the PMO website, Singh has made 62 visits abroad over the last nine years.

“Given the high expenditure on such travels, Rajan’s move is welcome,” one of the economists told Faking News.

The development is significant also because the economists think Rajan’s action offers a clue as to what his functioning would be like as the next RBI governor. He is to assume office in September.

“Rajan’s achievement in this is commendable, especially considering he has been on the job only for two days now, that too as just an officer on special duty in the RBI. I am sure he will be able to make a big difference,” another economist said.

As economists’ expectations soar, levels of anxiety are rising in tandem at the finance ministry. The sources quoted earlier said that the finance ministry is also watching Rajan’s moves closely.