I am not an Economist, but elementary common sense says that a strong currency should always be welcomed by the citizens!
Let us see how we can benefit in this scenario
1)We should invite FDI or form JV's in all core sectors or allow foreign companies to invest in core sectors , which would be very attractive as the entry cost is very much lowered as normally most of these companies import most of the plant & machinery. This would also give an incentive to invest in Core Sectors like Power,Infrastructure,Healthcare and may be even Defense.
2)We should encourage Indian Companies to invest /acquire foreign companies. Effectively they would be doing it cheap(Infosys is already doing it)
3)Government should allow free convertibility of Rupee to allow individuals/HNIs to invest in foreign businesses/assets freely
A strong rupee always increases inward looking and free and cheap availability of Goods and Services as far the country is concerned , which is good for masses,inflation and country in the long run
RE:How India should benefit from a strong rupee
by sam on Jul 25, 2007 10:52 AM Permalink
A strong rupee may make imports cheaper. But where is the govt allowing that to happen. They have countervailing duties & other import licences acting as a deterent to import cheaper goods. This is the reason why we are not able to import cement which is cheaper in other countries whereas the cement producers are continously raising prices inspite of govts efforts to stop them doing so.
RE:How India should benefit from a strong rupee
by DSK Rao on Jul 25, 2007 11:22 AM Permalink
My dear learned friend , please study the figures of Indian Exports and Imports to understand the tilt. Indian Imports are much higher than her Exports! and that itself should justify a strong rupee. As far as USA trying to weaken the dollar is concerned , it is as true as the WMD's in Iraq. USA is in deep economic troubles due to the Wars it is supporting in Iraq & Afghanisthan and also the large scale outsourcing happening(which definitely is helping countries like India) at the cost of USA citizens. Even after doing their best to create Jobs in USA , the unemployment figures are alarming !So , presently USA & it's dollar are on a very weak wicket.
