No doubt rupee will find its own level like water. But the level cannot
be so low to damage the stability of various markets and create a panic
situation. It cannot be allowed to have a free fall when the country
has abundant resources in the form of Gold , forex reserves, cash rich
corporates, non resident indians waiting to get an opportunity to freely
invest in India provided the atmosphere is conducive for investment,
high savings potential completely ignored because of wrong taxation
policies and laxity in administration,etc. Before the situation becomes
beyond control, steps have to be initiated as if the economy is facing a
Financial emergency situation. some of the steps can be to revisit the
NRI related inflows, enhance SB and FD interest rates, convert house
hold savings of gold into cash by offering some incentives, remove or
raise the Interest rate ceiling on Bank interest from Rs 10000 to Rs
100000. compel the cash rich corporates and HNI to invest in
infrastructure bonds to be issued by the Govt, offer incentives to
manufacture import substitutes, enhance the facilities in terms of
infrastructure to improve exports, etc. Efforts have to be taken on a
war footing so that the market will get the signal and the negative
sentiments will get a change.
Dr.T.V.Gopalakrishnan
(This comment in response to Mr Chidambaram's observation "Rupee will find its level" appeared in BL dated 27/8/13)
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