EDITORIAL Turn free fall of Rupee into an opportunity Finance minister P Chidambaram has done well to dispel fears that the depreciation of the Indian rupee is an unmitigated disaster. Far from that, it provides the nation opportunities in the international market. For instance, information technology companies, which earn substantial sums of foreign exchange, have all recorded a huge surge in their earnings during the last quarter. Of course, one does not forget that the outgo on imports like oil and natural gas has been galloping but, then, that is the price the nation has to pay for allowing the rupee to float free. However, any step to control the rupee would be counter-productive. Also, allowance has to be made for the fact that the rupee’s fall is not the result of a “home-grown crisis” as many seem to think. In fact, the economies of some high-growth countries like Indonesia, Thailand, South Africa, Brazil and Turkey have, of late, been showing similar trends. During the last two years, the rupee’s value has gone down by nearly 45 per cent. This means Indian goods and services have become 45 per cent more competitive in the international market during the same period. In other words, the depreciation is a godsend for exporters and manufacturers. The government should identify sectors like textiles, motor parts, pharmaceuticals, IT and tourism, which stand to gain from the rupee’s fall, and promote them. Trade facilitation and export clearance mechanisms that are in government hands need to be speeded up. There should be realisation that the economy is more open than it ever was and, therefore, the rupee’s movements are subject to the vagaries of international trade. The advantages of pushing exports and manufacture are manifold. An export-oriented manufacturing base stays with the economy once it is developed in response to price signals. Once exports pick up substantially, the rupee will find its level vis-a-vis currencies like the dollar and the arrow. Nothing should dampen growth and investment which should remain the watchwords.
Posted on: Mon, 26 Aug 2013 08:04:11 +0000
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