Editorial-Why the rupee wept on?

Greece is in turmoil. Europe is in the throes of a double-dip recession exacerbated by a sovereign debt crisis. The future of the euro is in doubt. There have been political consequences of the economic meltdown: at least 11 regime changes have taken place in the 27 countries of the European Union over the last few years. The Indian rupee has plummeted to a new low against the US dollar. Is there a connection? Yes, there is, even if the link is somewhat tenuous. However, we would be fooling no one but ourselves if we attribute the fall in the value of the Indian currency primarily to an unfavourable and volatile external economic environment.
On May 17, finance minister Pranab Mukherjee blamed the slide in stock market indices and the external value of the rupee to the euro crisis and the state of the international economy.
The finance minister said the government would be resorting to a fresh set of austerity measures but quickly added that he was not pressing the panic button. “I am going to issue some sort of austerity measures… whether people like it or not… to convey a signal that we are responding to the situation,” he said.
What are these unspecified austerity measures Mr Mukherjee was talking about? Was he referring to an impending increase in the prices of petrol, diesel and perhaps cooking gas as well? He has already claimed in his Budget speech that the Union government would be containing subsidies to two per cent of the country’s gross domestic product (GDP) during the current financial year. If this target is indeed to be achieved, a sharp hike in the prices of petroleum products is imminent. If that indeed happens — and few will be surprised if it does — it will take place when international prices of crude oil have eased a bit. India has, however, not been able to take advantage of this softening of crude oil prices because of the depreciation of the rupee.
In fact, the principal reason why the value of the Indian currency has come down sharply in relation to the US dollar is the huge 56 per cent hike in the country’s trade deficit (the difference between the value of imports and exports) in 2011-12 over the previous year. This is because of the fact that while imports have risen by nearly a third, the rate of growth of exports in 2011-12 has halved from the 41 per cent growth achieved in the previous fiscal year (2010-11).
The jump in the trade deficit has contributed largely to the rise in India’s current account deficit in the balance of payments (the gap between inflows and outflows of foreign exchange), which currently stands in excess of four per cent of the country’s GDP. Such high deficits are not sustainable and will entail strong corrective action.
The external value of the rupee has come down on account of other factors. The Reserve Bank of India has been reluctant to draw down reserves and pump dollars into the market to prop up the value of the rupee. The central bank says it intervenes only to check sharp fluctuations and not to artificially prop up the value of the rupee in the face of secular trends in exchange rates on account of external as well as internal considerations.
When the rupee depreciates, it is meant to provide a boost to exporters because the relative value of their goods and services come down. This, in turn, should help close the trade deficit. But this is not happening. Why? Imports are not coming down because one-third of India’s total imports currently comprises crude oil and 80 per cent of the country’s requirements of crude oil are imported. Moreover, markets for India’s exports are not growing; on the contrary, these have shrunk in the West on account of the Great Recession, which is continuing. China’s growth rate too has slowed down.
India’s experience has been different.
India’s economic power is in the hands of Brahminical and high class Industrialist people. In the field of economic power all Brahminical think tank heads are putting their efforts, wheareas in the Industrial sectors all Industrialist brains are working. New economic policy was brought by the then Finance minister Dr.ManMohan Singh, when a Brahmin Mr.P.V.Narsimharao was holding the post of prime ministership. Through this new economic policy introduced in 1984, Liberalisation, privatization and globalization was introduced in India. It was told that with this policy the economic condition of India will improve to such an extent which nobody would have ever dreamt of. Through this policy doors were open to all multinational companies to establish their business within India by utilizing resources like land and power at the cheapest rates. It was told that due to entry of multinational companies in India they will bring their currency with them and India’s overall position in International market will improve. But after 28 years of this economic policy the economic condition of India is further deteriorated rather than improving. Today the roots of devaluation of Indian rupee lies in the introduction of this economic policy 28 years back. This economic policy has been in favor of only the Brahminical Industrialist and not the common mass. These Industrialists has nothing to do with the economic condition of the country. This new economic policy has been benefitted to 15% Brahmins and industrialists, but 85% Bahujan mass is effected due to adoption of such policy. If we analyse the benefit of this policy, then we will come to conclusion that this new economic policy has benefitted to 35 high class Industrialist families in creating 7965 billion rupees of property for them and making 82 crore Mulnivasis strive for a small piece of bread. Who is responsible for this the high caste 15% people or 85% Mulnivasis? Does these 85% people have any reach to the world market? Definitely not. So for devaluation of rupee these 85% Mulnivasis are not responsible. It is to be noted that for the maximum time the post of Finance ministership was hold by a brahmin. Pranab Mukherjee was a Bengali brahmin, Chidambaram was a Tamil Brahmin.
Nowhere the economic growth of 15% population is considered as growth of the country. It should have been other way of considering 85% people. Today’s devaluation of Rupee is due to utilization of rule for the personal benefits of the Industrialists and nothing else. A deliberate attempt has been made by the Industrialist to maintain 85% Mulnivasi people slave.

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