Rupee crisis will blow over
The present downward slide i n the foreign exchange value of the rupee is just a temporary phase. The Indian currency, backed by the strong manufacturing capacity of the domestic industries, very large farm produce and sizeable increment in the national wealth brought about by services rendered by Indian diaspora spread the world over and even those inside the country, does not call for any undue concern in the present scenario.
It is high time that India’s economic and fiscal policies, which of late are getting increasingly enslaved to doctrines of western, developed nations, be critically assessed and rectified.
Despite temporary turbulence caused by inefficiency and corruption in the political system, the entire world recognises that India, is still the best bet for heavy investment to cater to the needs of ever enlarging markets and for taking advantage of the availability of large manpower, both skilled and educated.
In an emerging scenario, where large markets in a vast country with stable governance are visible, big and shrewd players of the corporate sector are making a beeline, or else waiting to invest a large amount of capital for industrial units.
Planners of economic and fiscal policies in our country are unnecessarily getting over-liberal for attracting FDI on a large scale at a time when we are on a weak wicket due to some local and current problems.
The present foreign exchange crisis has however to be resolved but the government has to act with patience and deeper understanding of market factors, many a time engineered by shrewd and experienced operators of big business of the developed world.
The main problem at present is about the huge foreign exchange needed for import of petroleum products. It should be boldly faced and realities accepted by the planners in India.
However, import of all unessential goods particularly, the luxury items should be drastically restricted to ease the present shortfall in foreign exchange liquidity. Increasing indigenous exports facilitated by low value of rupee at present shall improve the situation further.
It is reasonably assessed that the exchange value of the rupee is bound to stabilise to a normal level in two to three months time.
Hence, the government should take aggressive steps to project that the intrinsic strength of rupee in domestic market is unaffected by the scenario presently exhibited in foreign exchange. The false notion about the weakening of Indian currency has to be wiped out even from among the NRIs who contributed $ 6653 million in April-June quarter, a year ago, and have withheld it to only $ 5497 million in April-June quarter of the current year —a drop of about 16% in deposit. Confidence restored in the NRIs about the basic strength of rupee in domestic market shall reverse the trend.
Rather, they shall be tempted to transfer a much larger amount to India at this moment as each dollar shall fetch Rs 65 and each Pound shall fetch Rs 100 which shall be much larger now, then when the exchange value of rupee stabilises in future.
The government has also to mull about the possibility of having two exchange rates. One should be for transfer by NRIs and that for normal business transactions.
The other should be for FDI as may come forward. No F.D.I. should be accepted beyond the ceiling exchange rate of say Rs 50 for a dollar or Rs 70 for a pound. India’s intrinsic strength lies in its large manpower, natural resources and gradually stabilszing democracy.
It has to be noted that till some two centuries back when there were no mechanical factories and no foreign domination, Indian agriculture, farm produce and well established handicrafts generated so much wealth for the country, that it was known as a ‘Golden Bird’ throughout the world.
The riches prevailing in India allured so many armies of Central Asia and SouthEast Europe to invade India and plunder its riches.
Hence, the policy of the planners in the country should be to realise the intrinsic strength of our basic economy, which very much strengthens the rupee in the domestic market and also has a wide impact on its foreign exchange value. Aggressive policies to ward off machinations of the big businesses of the world need be pursued.