"The rise of India has come as a surprise to Germany," said Joachim Beck from the Institute for Asian Studies at the German Institute of Global and Area Studies. "It has been so accustomed to seeing India as poor, as an unstable, multifaceted country. The German government never thought India could become a world power in economic and political terms."
Atleast they are finally waking up. Article
6 comments:
folks,
any knowledgeable "economists" in this forum?
what's ur take on stronger rupee. although it is personally hurting me as i do substantial remittance to india i need to understand it's overall benefit to india.
also vis-a-vis china how is stronger rupee better? if at all it is.
i m thinking of transferring bulk of saving and "hedge" it so to say.
i also know that early 90s rupee was in the 30s or even lower. in fact in 1980s it was around 16-20 to usd. is it right?
I am not sure of the economic part, but I'd feel happy if the value of Rupee increases. (God known when it might equal 1 dollar), but we should develop our R&D and production to such a level that we need not depend upon the US-dollar based S/W exports.
Anyway, regarding the German, commenting upon India being poor... here is my take on germany.
.... The rise of religious freedom in Germany is surprising. It has been accustomed to seeing German as third Reich, with concentration camps, anti-Jewism etc. The Indian government never thought Germany would welcome religious freedom in terms of non semitic religions ....
i once claimed that i was "famous economist rajeev" for having coined "nehruvian penalty" just like that idiot raj krishna was a "famous economist" for having coined the racist phrase "hindu rate of growth".
so, ahem... listen up, people, to famous economist rajeev.
1. your dollars will buy less rupees of course. but that also means that your rupees, well invested in india (especially in the current bull market in real estate), will buy more and more both in india and in the US. a strong currency implies a strong economy, which is capable of buying more and more foreign goods cheap.
2. china is heavily export-oriented. so they cannot afford to let their currency rise. india is expanding mostly on domestic demand, so an appreciating rupee doesn't hurt a lot of industry, except those that export a lot, like IT and textiles.
3. it is a good idea to hedge with rupees. you could also think of investing in a rupee-denominated pension plan for your retirement years (or equivalent plan. there are these insurance plans called ULIPs which i find a little dubious, but your mileage may vary).
4. i can remember a time when 1$ = rs. 10. this was in the 1970s.
Thanks for those questions Kauntaneya and answers "economist" Rajeev!!!!!..
I have been trying to wrestle similiar questions myself and am still trying to find answers!!
But is it necessary for Rupee to rise dramatically to be considered a strong country..I personally think India could manage its currency better and needs to control "hot money" pouring into our stock markets...IMHO Hurting India's growth stories like IT and textiles (that provides 'blue collar' jobs to millions) is not a good thing ..
But then i am no economist!!
I'm no economist either and I do not have a JNU degree too.
One way to hedge the dollar is to make sure that our foreign currency reserved in Dollars are equal to our foreign debt in dollars.
One of the reasons for the strong rupee is the unnecessary influx of hot money into our stock markets. This needs to be stopped to reduce artificial upward pressure on the rupee.
The thing to look at is Real Effective Exchange Rate and by that token the Rupee is heavily overvalued. The definition of REER is as follows: -
The weighted average of a country's currency relative to an index or basket of other major currencies adjusted for the effects of inflation. The weights are determined by comparing the relative trade balances, in terms of one country's currency, with each other country within the index.
INR is moving up as is the stock market because of a lot of speculative inflows. Let's face it that the investment short term or long term would not come in unless there is a good story to back it. Some sterilisation is necessary or we will be in big trouble at the first downturn.
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