Is alternative to rupee needed?
India showed its inherent economic weakness as the rupee fell to 68.8 against dollar, the steepest fall in the last two decades, during...
India showed its inherent economic weakness as the rupee fell to 68.8 against dollar, the steepest fall in the last two decades, during Wednesday’s business hours. The rupee has lost 13.1 per cent this quarter and 19.5 per cent this year. Although it saliently recovered during trading on Wednesday, the undercurrent is bearish and it is on the verge of hitting the 70-level, as predicted by analysts.
The weakness? Yes, we (Indians) go by sentiments and not by fundamentals. As Finance Minister P Chidambaram said on Tuesday, the present crisis is the result of “certain decisions taken during 2009-11,” without referring to the Pranab Mukherjee days. Truly, we rubbed the foreign investors on the wrong side by taking away tax benefits and stalling the reform process. Given his stature, Mukherjee could have done better, as he honestly admitted while demitting office that he might have committed a couple of mistakes, for which the Indian economy is now suffering. Of course, Chidambaram tried to correct the mistakes, but failed though successful on a few occasions.
For onlookers, Tuesday’s address of Chidambaram looks as an attempt to absolve himself and find a scapegoat for the present crisis. In fact, the Indian economy requires more reforms and less of restrictions. But, in the last two weeks, the Government and the banking regulator together initiated a number of measures, which the investor community took as an indication that there would be more controls on capital flows.