Friday, June 28, 2013
Halt the slump
The continued depreciation of rupee against the dollar is likely to create an alarming economic situation in the country. No attempt is seen to be made sincerely to halt the sharp fall of rupee against the dollar. The all-time low value of rupee against the dollar is bound to escalate the prices of all importing goods and consequently it will have cascading impact on all commodities. The continued depreciation of rupee is not a day's development. The continued mismanagement of economic affairs during the UPA-II has brought situation to this worsening stage. It is the irony of UPA-II that despite being led by the Prime Minister Dr. Manmohan Singh, who is a world-renowned economist in own right along with Deputy Chairman of Planning Commission and his finance minister, the economy of the nation is weakening day by day. There appears to be a deep-rooted problem in UPA government's economic policy mechanism. Government is unwilling to address the problem why the rupee is falling against dollar day by day at right earnest. Its callous and directionless economic approach has created the mess. It is its own making. Market and reform centric economic policy is making the rich richer and the poor poorer on the ground during the period of UPA-II. As long as Left parties were extending outside support to UPA-I, its economy was robust and progressing fast. The reason behind it was that they put break on the rich -centric economic policy and corrupt practices of the government. After the parting of ways with UPA by the Left, it started introducing economic reforms with full force without realizing the adverse consequences of its economic policy on the ground. The need of the hour is to halt the continued falling of rupee against Dollar. Otherwise, it will have to face the wrath of the people in Lok Sabha elections next year. The economic policy makers must realize that what they are pursuing is only breaking the back of the people due to skyrocketing prices of all commodities. The rupee has slumped to a record low, breaching the key psychological level of 60 to the dollar, on the back of end-of-month dollar demand from domestic importers and falls in most emerging Asian currencies. The fall has come even after the Reserve Bank of India attempted to defend the currency before the rupee hit the 60 level. The rupee was trading at 60.26/27 to the dollar, having hit a record low of 60.34. The falls in the rupee led to a slump in bond prices, with the 10-year bond yield up 4 basis points to 7.54 percent from the previous close. .Rupee has witnessed sharp depreciation in the past two-months, it has fallen 11% since May, spooking equity markets. Concerns over external debt have also become exacerbated due to the decline in currency.