Our Indian Rupee getting clobbered in the market isn’t a
kind of news that catches our attention, as we are all very accustomed to such
kind of news. Since last six months or so, the Rupee has been witnessing its
worst days. But today it touched a new low in the afternoon breaching the 56
per $ mark. In a way the Rupee has celebrated the Government’s three years in
the power!! :P
People who have some concerns about the economy have repeatedly
stated their apprehensions about the declining Rupee; but there has been complete
inaction by the Government and I am talking about some strong measures that
must have been taken. It is really very difficult to understand why some of the
major problems are being overlooked by the Government. Common Indian man/woman
is the common victim of all this. One reader’s comment caught my eye: “Soniaji,
you shall continue to articulate the concern of common people, so long as they
are suffering. They have been the biggest victims of the rank misrule of the
UPA government. (SOURCE: TruthDive)”. What answer does honorable Soniyaji have
to this?
The news we continuously heard in last few days was that the
Finance Ministry is considering hiking the fuel prices after the Parliament
session is over and they believe that it will help the Government in the
matters of Fiscal Deficit as well as Current Account Deficit. Also FDI in multi
brand retail is going to be considered ‘seriously’.
But the main aspect in all this is that the Ministry doesn’t expect the
situation to improve before the next two weeks. Is this the way the Finance
Ministry of a country handles a situation, proposing something in the future
and estimating that the situation is not to improve over next two weeks? But again,
this fact shows that we are living in India, where the common man comes into
the picture only once in a 5 year period.
As we have already seen, the measures already taken by the
RBI have managed to just slow down the pace of the declining Rupee temporarily.
The RBI’s move to curtail currency arbitrage on Monday went in vain because the
policy inaction made Morgan Stanley lower its forecast for our economic growth.
Furthermore, as the USD demand from the oil importers increased, the
depreciation of the Indian currency continued, eventually breaching the 56 mark
today. The Government blamed market forces. In this never ending game of
blaming and not taking the responsibility, our Indian economy emerges as the
loser every time we face such situations in the market.
The worst case scenario is the BOP, as it has a direct
impact on the ECB obligations of many companies and they are going to find it
difficult to meet the necessary requirements. Depreciating Rupee also shuts the
doors for any new foreign currency flow into the Indian markets. This adds more
pressure on the already over-stretched Indian economy. One of the interviews I
read on the net revealed that many experts see this problem as a structural one
rather than a cyclical one, recommending that we need some measures,
considering the problem as a structural one.
At this moment I recall a very fundamental and basic concept
that can be applied to all the issues, let them be on a personal level,
micro-economic level, or macro-economic level: “If we have our base strong and
if we cover all the basic problems, then we can always get out of any
predicament.” Keeping in mind all the basic concepts and applying them to every
situation coming one’s way can even help in avoiding any unpleasant situation. We
should look for the main problem which is the cause of all the other problems
and sort that out first instead of trying to solve each and every problem which
is just the result and not the cause. And so, I suppose, for this structural
problem, we need remedial measures sorting out the fundamental policy issues
which, I think are at the root of all.
Cheers!! :)
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