India’s economic reforms of 1991 have benefited and facilitated investment in the service sectors like software development for export, air travel, media companies, etc., which do not require much technology to run, but which involve high tech items to start with as capital investment, which were imported. Though software developing companies are called high technology companies, they use high technology such as computers but what they produce are things that can only be called low tech that help countries using high tech methods of production like USA and Europe. It helps those countries to improve their productive ability in various “brick and mortal economy” industries. Automobile industry has improved a great deal now in India, but the production of commercial vehicles – which are needed for production purposes unlike the cars which are mainly for consumption purposes - need to be improved. I have heard about only two companies that have presence in this field – Volvo and Daimler Benz. India now needs reforms that will facilitate improving our manufacturing sector such as automobiles, high tech machines for various industries, IC chips, etc., which will help our current account deficit as well as stabilize our currency. This will need reforms in our outdated labor laws and realty sector. Even the problem of high import of gold is because of the prosperity of the middle class since the reforms, which because of lack of investment opportunities, moving to gold as an investment option. This problem can only be temporarily managed with higher import duties, but if it is to be solved, not by ad hoc measure, then the reforms are needed for more opportunities for businessmen in the manufacturing sectors which will also solve the problem of foreign exchange outflow due to import of gold if more avenues are opened for investment. This article highlights all these aspects of our exchange problem and our current account deficit problem. thehindu/business/Economy/focus-should-be-on-the-real-sector-and-not-on-rupee/article5032739.ece
Posted on: Mon, 19 Aug 2013 06:30:15 +0000