Tuesday, September 10, 2013

WEAK RUPEE IS GOOD, CASH ON IT!!!!!



“The center should not be worried by falling rupee, instead, it should use the situation to push our exports and establish investors’ faith in the Indian Story.”
Why we are in panic? Weakened rupee is an opportunity. I wonder why our finance Minister is battling to stem the collapse of the Indian rupee from the 55 for a dollar a month ago to 67 this week. He really should be busy to exploit this opportunity.
The fall of the rupee is a political, not an economic disaster. Our traders and big businesses, which have been growing based on cheap China imports, are in panic.
Our foreign exchange reserves at about $250 billion are low, but nothing to panic about when exports grow, imports drop and investors start knocking our doors once again. So, the government should get busy with removing the structural impediments in export by reducing formalities and with innovative incentives to push exports.
Let us reward those exporters, who have a large domestic value added with full tax exemption. If the government does this on a priority basis, both Indian and foreign investors will flock around us like they did to invest in China.
It is good that measures are being taken to curb imports with increased import duties on gold and consumer durables and raising short-term interest rates to shoo away the currency speculators. Weak rupee will have a positive effect on FDI. Let us give incentives like tax relief, quick response at the entry points for import of raw goods by exporters and speedy product export clearances, which help making our exports more competitive.
-Compiled by Economics teacher, CIE



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