The noise over the falling rupee is a lot louder these days than the Sensex, justifiably so. The sliding currency threatens India's place at the high table among potential economic leaders of tomorrow.
Part of it is due to investors' flight to safety to US assets amid a worsening European Union crisis. But policy makers can't blame international developments for all the ills. They slept at the wheel when macro-economic conditions deteriorated over the years - be it the current account deficit, or the fiscal deficit.
It was taken for granted that overseas investors will forever be pouring money into India, irrespective of its macro-economic conditions. That was not to be.
While the global liquidity tide for years enabled India to enjoy the privilege of a 'growth market', along with China, India's weak fundamentals are getting exposed when the tide is turning.
Imprudent subsidies boosted consumption without consumers realising how much it would actually cost if market prices were charged.
It is time that the rupee is allowed to depreciate and left to find its own level that could slow imports and help raise exports. Foreign investors who are holding back investments because of unfriendly tax proposals should be lured.
Part of it is due to investors' flight to safety to US assets amid a worsening European Union crisis. But policy makers can't blame international developments for all the ills. They slept at the wheel when macro-economic conditions deteriorated over the years - be it the current account deficit, or the fiscal deficit.
It was taken for granted that overseas investors will forever be pouring money into India, irrespective of its macro-economic conditions. That was not to be.
While the global liquidity tide for years enabled India to enjoy the privilege of a 'growth market', along with China, India's weak fundamentals are getting exposed when the tide is turning.
Imprudent subsidies boosted consumption without consumers realising how much it would actually cost if market prices were charged.
It is time that the rupee is allowed to depreciate and left to find its own level that could slow imports and help raise exports. Foreign investors who are holding back investments because of unfriendly tax proposals should be lured.
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