---------- Forwarded message ----------
From: ramnath narayanan
From: ramnath narayanan
Dear Friends:
The following article says: "India is living beyond its means. The sooner it wakes up to this fact, the better."
Eleven months ago, I had sent the following question to a select number of people:
Over the last two-three decades, whether the international economic situation is favorable or unfavorable, China almost always continues to enjoy sustained export growth and a trade surplus, while India always continues to struggle with an almost unsustainable trade deficit? Can some one explain why this should be so? Is there no hope for India?
The best answer I received read:
Because China has a manufacturing base, good infrastructure, skilled and disciplined workers, a highly technocratic leadership, strategic ambition, and it keeps costs low in a variety of ways including in terms of work conditions.
Any comments with reference to whether India will ever catch up with China?
Ram
Signal jamming the Indian rupee
8 January 2014
Author: Sugata Marjit, Centre for Studies in Social Sciences, Calcutta
India's huge trade deficit has badly damaged the country's current account deficit, despite recent improvements. The overall situation is unlikely to change any time soon, since India's experience over the last decade suggests a steady and steep increase in its trade and current account deficits as a percentage of GDP. So how can India pay for this deficit and develop a longer-term solution?
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sent from samsung galaxy note, so please excuse brevity
1 comment:
The author Marjit says India doesn't want the rupee to depreciate but fails to mention the obvious reason why: India imports so many basics that rupee depreciation would trigger massive inflation, which the average common man is ill-equipped to cope with.
The real answer is to implement pro-business laws and policies, so that India will produce more things at home, and import as little as possible, thereby exposing them less to a depreciated rupee. At the same time, this will increase employment demand and eventually wages, so that ordinary Indians would be in a better position to cope with price increases.
Nobody wants to do this, except Modi. The rest want to play the fiddle and twiddle their thumbs, not seeing the massive tsunami coming due to the US Fed taper, as well as a likely sovereign credit downgrade if India produces an insufficient majority govt.
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