The Dollar Saga.. THE CRISIS: Yes today we are in a financial crisis. The rupee is plunging into historic lows. Ona lighter side a plunging neckline might be welcome but not a plunging rupee. The trade deficit is huge in India. Our imports are huge but exports are less.(This is called trade deficit). In the yesteryear Raj Kapoor movie MERA NAAM JOKER, Raj Kapoor mentions about this to his Mother. This is an age old financial problem for us. The actual problem facing us today is the oil imports. We produce very little oil and so we have to import more. The price of oil is quoted in US DOLLARS, which is a disadvantage for us. If we are able to control our oil imports we can to a large extent control the devaluation of the rupee. Denmark had the same problem in the 1970s when they had to import huge oil. The then Government took a decision to go for public transport and bicycles. So, today Denmark is not in such a crisis. Though India because of its sheer size cannot solve the problem so easily, we can have a very good public transport and disincentivise cars by imposing huge taxes, or one car per family rule, or a congestion tax. Non conventional energy like solar and wind power have to be used. We have to identify other exports than just software and be competitive in manufacturing machinery both light and heavy and export them and even internally consume so that the imports can come down. The internal expertise in manufacturing and catering to the export and local markets have to be encouraged. The measures taken now like selling US dollars by the RBI are only temporary in nature. Increase in trade is the only Mantra. - By Mr. Sanjay Muddappa
Posted on: Thu, 22 Aug 2013 16:20:07 +0000
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