Descending Rupee and various implication in the Economy

The Indian currency’s nosediving situation is a worrying trend ,yet not alarming , but if not controlled it would turns out to be a serious one which might put our economy under serious stress . The ripple effects caused by the declining rupee will arrest the macro economic growth and also take us at least 10 years backward and make us stand to loose what ever growth we have achieved so far. The RBI and finance ministry is doing every thing possible to control it and stabilize the currency , but the effort seems to be not effective in stemming the rupee’s slide.

The global factors including the federal reserves interim actions to mint more money by accepting bonds seems to be working well temporarily for the US economy , but certainly the actions by America is hurting and haunting the developing economies like India in a big way. We can term the current situation as temporary one and going forward we can expect a revival of fortunes in Indian economy, but having said that we cannot allow our currency to be pitied against the dollar and watch the valuation of the currency hitting low against the dollar every now & then . As experts comments our fundamentals are right and we are having a higher savings rate and equally having higher import bill than the export , which leads to serious balance of payment crisis , The fundamental problems still remains not  addressed we are not creating enough productive capacities in manufacturing sector and their by not creating enough employment opportunity and equally important valuation of our currency needs to be linked with our domestic production , instead of that at present we left our currency open in the lurch to swing in favor of global situations , Our country needs to fundamentally invest in our domestic economy and create internal demand .The import and export should be balanced and ever increasing demand of oil & gas should be reduced and should find alternative methods of energy creation and reduce the dependence of imported oil to a substantial level .The contribution of service industry especially IT sector to GDP is increasing ,but we lost our focus in investing on manufacturing & agriculture sector. The Current account defect is widening just because of ever increasing demand for crude and adding to the woes the corporate sector is increasingly in the look out for more external commercial borrowing ,because they are able to get finance at cheaper rate than domestically. In 90’s we had experienced a transitional shift in the form of liberalizing our economy by allowing the free flow of foreign capital to our soil and never shown the urgency to put in to practice to make the FII investment stay for a longer duration and we facilitated our market to the foreigners to make profit and then exit at will and also never taken significant measures to allow the capital to stay for a longer period to improve our domestic situation , such lapses have had a cascading effect on our long term growth.

But the Rupees’s present predicament is interim one and but the need to have a long term view is equally important and their by inducing serious of measures to bring the confidence back on track., for any government in the future it is going to be a challenging job at hand to balance the growth as well as allocating the resources for social development .Some neo- liberal thinkers have been vouching for a massive cut in social spending , but what ever may be their perspective we cannot ever allow the perennial problems like poverty, education& health care to be kept in the back burner .The thrust areas is social development by addressing the problems like poverty, affordable healthcare & education to poorest of the poor .On other hand the spending on infrastructure development ,support to start new manufacturing facilities and skill development to the people would enable the money flow internally which would create equal demand for the finished goods & products. A very strong internal demand and delivery would in turn strengthen the rupees and reduce the dependence from foreign market . The balanced growth and sustainable approach in finding the right equilibrium is very important and to achieve the same requires patience and focus .


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