At the time of independence, the rupee was equal to a dollar, so we should introspect why it has been devalued by 65 times in 66 years. But one that is simple to understand is this — India spends most of its foreign currency assets to import two big items — gold and petroleum.
Mamta Bansal, New Delhi
Back in 2008, when the U.S. and west Europe were reeling under a financial crisis (attributed to the recklessness of banks) and India seemed relatively stable, our economic establishment took great pride in loftily declaring that India had a much more broad-based grassroots economy whose fundamentals are strong. Further, thanks to governmental and Reserve Bank control mechanisms, the Indian financial regime was much more disciplined, etc. But the continuing, headlong nosedive of the rupee and the boomeranging of the measures taken recently by the Finance Minister and the RBI (“Economy is challenged, Chidambaram admits,” Aug. 23) to stem the tide expose them to be like pompous King Canute who did not have a clue as to what was happening. Using common sense, the position seems to be that the economy has been shored up by the short-term inflows that came our way from abroad because of the U.S. recession, and now collapsing as those foreign investments are going back. It is apparent that there is little inherent strength in the economy, systematically undermined as it has been by a decade of UPA mismanagement, characterised by unconscionable largesse to corporates, big business and cronies, mind-boggling corruption, boundless growth of the black economy, skyrocketing real estate markets and the escape of colossal amounts of Indian wealth to Swiss banks and tax-free havens.
A.N. Lakshmanan, Bangalore
The phenomenon of the consistent fall of the rupee is disconcerting, attributable to the government’s poor economic policies. The increase in the import of goods and soaring gold prices due to the hike in customs duty have contributed to this fear factor. The Finance Minister’s assurance that no fresh capital control measures will be imposed in the market is not reassuring, a rhetoric that is usually done to assuage people’s feelings over the present economic impasse due to the rupee fall. The flow of foreign currency into India can be effectively brought about by increasing the NRI deposit rates of interest.
N. Visveswaran, Chennai
Every now and then our Finance Minister gives “pep talks” with no backup data or earnest efforts to boost the economy. He leaves the aam aadmi in the deep end, struggling to make both ends meet. We need to think of drastic measures. The proposed food security bill will make things worse for the next government. We must even think in terms of bringing back wealth stashed in tax havens.
N. Ramamurthy, Chennai
The government is clearly in a spot. The steps taken so far are just not effective. Unless there are sufficient foreign exchange flows, the days ahead will be very difficult. It is surprising that the government has not thought about bringing back black money from abroad.
G. Ramachandran, Thiruvananthapuram