By Rajat Sharma:
It was a bright sunny afternoon of August 28, 2013, when the news channels started flashing the breaking news in their usual ‘Breaking news’ style. The rupee had touched its lowest mark of 68.80 against a dollar first time ever in the history of our economy. My father, who usually refrains from criticizing the administration and governance of our country, commented in certain despair that at the time of independence our rupee was equivalent to a dollar and it required just two rupees to get a Great Britain Pound in our pocket. His comment left me dumbstruck as I could not understand a simple fact that if our finance ministry claims a certain amount of GDP and GNP growth every year then why is it that it takes us more than 60 of our national currency coins to face a single American dollar and that too when once they shared the same level in world economy.
The first and foremost reason that accounts for such dwindling is the inability of our country to utilize its abundant natural resources. Once we were known for our iron ore exports to countries such as the U.S.A, Japan, North and South Korea, but now due to excessive judicial and constitutional barriers raised on the mining and exports from Karnataka and Goa ports, our country has incurred a fall of 43.5% on iron ore exports during April-October 2013. Similarly, the coal exports figures that we used to flaunt a few decades back have not just gone down, rather our nation is bound to import coal from countries like Canada, Australia and Indonesia in order to meet its energy requirements.
Furthermore, the increasing disinterest of the foreign investors to invest in our country is another reason for the depreciating value of our currency. The politically charged and unstable environment at the state and national level is a critical reason for such a disinterest as the investors seem to be skeptical about the future of their investments. Change in the foreign and economic policies with the change in the government seems to be a cause of insecurity for these investors as they may have to face an all new set of rules and guidelines that may or may not go in their favor. Ten years back, the IT Consultancy and BPO industry seemed flourishing at a pronouncing and unstoppable rate but today we see the IT and BPO giants investing in countries such as China, Bangladesh, Sri Lanka, Indonesia and so on, for the similar support that once we were boasting of. Even our own IT firms such as TCS, Infosys, and Wipro are investing their human and non-human capital in China at a faster rate as they look for better future prospects there.
Some might cite this due to the cheaper and harder working resources in these countries but the actual reason is the excessive and tedious paperwork and formalities that these investors have to fulfill before starting up their venture on our land. You must be surprised to know that majority of the Motels in United States of America are owned by Gujarati businessmen. If anyone tries to seek the reason that why these people did not invest in their own country but had to rush to the other part of the globe to run such a business then the major reason that would be revealed is the excessive paper work, endless clearances and months of patience (in some cases it may be years as well) that one must be ready with before actually starting the work; and to none’s surprise every paper or file needs certain amount of palm greasing at every level in order to ensure its constant motion to the upper levels.
In addition to it, the over tenderness shown by our political parties while allocating the hefty subsidies appears more to be a vote bank captivation technique rather than a step to support the under-privileged sections of our society. With thousands of crores of subsidies being announced for Food Security, surplus gas cylinders, wavering farmer and industrial loans and so on at the onset of Parliamentary elections reflects that even after 67 years of independence our politics is still revolving around such populist mechanisms in order to woo the voters rather than some core development at grass root level. Whenever the government provides subsidies on various issues, finally that expense is endured by the taxpayer that we refer as ‘Cost to Exchequer’. If our government keeps on luring the voters by providing such subsidies rather than creating and utilizing some sources of sustainable development in future, we must be ready for witnessing much intense and steep depreciation of our rupee.