Prime Minister Manmohan Singh today spoke in Parliament on the current economic situation of the country. What he said was not different from the statement made by finance minister P Chidasmbaram a few days ago in Parliament. Prime Minister said to increase exports so did the finance minister. Prime Minister said external factor like the US Federal Reserve Policy and tension in Syria following Washington’s threat to strike as the reason for depreciation of Indian rupee. But these words are hardly reassuring unless the government acts to boost industrial production and encourage investments.
Another
reason advanced by Prime Minister for falling rupee was Current Accounts
Deficit. The only way to bring down the CAD is to increase exports and reduce
imports. Oil is one item that costs India heavily since 80% of our requirement
comes from import. On this Prime Minister said, “the current account deficit
was unsustainably large and to remedy this there needed to be a reduction in
our appetite for gold and consumption of petrol products, alluding to a need to
reduce imports”.
There
is an atmosphere of uncertainty on the economic front. The government’s failure
to check corruption has eroded the credibility of the government. Only
yesterday, the Supreme Court has reprimanded the government for the ‘missing
files’ of coal block allocations describing it as a criminal act of the
government.
Ratan
Tata has said that India’s credibility in the global market has eroded
considerably in the recent times due to lopsided policies. Tata said that many
important economic policies were being manipulated or delayed to benefit vested
interests in the private sector. Without naming anybody or any particular
industrial house, Tata hinted that some leading industrialists were behind
these manipulations.
Manmohan
Singh preferred to keep silence on this pointed question raised by Tata.
Asking
people to stop the lure of gold is not going to cut ice in the country. Indians
would continue to buy gold no matter what the economic situation is like in the
country.
Prime
Minister thinks that Indian rupee has overshot its real value and hopes to
reverse the trend, but how? He has not said much on this count. His cabinet
colleague Anand Sharma, Minister for Commerce has come out with the suggestion
that government should issue fresh ‘gold bond’ to attract gold from private
individuals. But the Reserve Bank of India is yet to give its nod. The outgoing
Governor of the RBI D. Subbarao in his last speech in Mumbai has blamed the
government’s wrong policies for the present economic crisis and the slide of
Indian rupee.
But
our Prime Minister says, “Forex markets have the notorious history of
overshooting... unfortunately this is happening not only to the rupee but other
currencies too".
The
notoriety of ‘foreign market’ is not a child play Mr. Prime Minister. People
will not discard Indian currency for no reason. If our economy is strong and
market robust, foreign exchange market would buy rupee and not sell it as is
the case now. Remove the impression that the government policies are being
guided and dictated by a handful of big houses. Infuse confidence in the
investors foreign and domestic to revive economy. It may take time. But the
government is in a hurry to push populist legislations to attract votes for the
elections. When our Prime Minister talks of reducing fiscal deficit by
controlling subsidies, he sounds far from convincing as subsidies will further
rise by the food security bill and there is no question of government reducing
subsidies on fertilizers and kerosene. Think again Mr. Prime Minister as the
time is running out.
~R. K. Sinha