The Tumbling Rupee

The Tumbling Rupee

 A lot is being said about the way the Rupee is falling almost every day. The Finance Ministry , the RBI and most of the Economists appear quite clueless. 

Various reasons are being rolled out from various corners .Starting from...politicians are planning to bring back their stacked Foreign Currencies, the US market is looking up , so the FIIs and other PE investors are transferring their investments from India to US or Euro zone ,the trade deficits are mounting , and so on.But the single biggest factor, to my mind is ...the fast melt down in the Confidence level in the Indian Economy and particularly in the ability of our Governing system, which is muddled with corruption ( which is now spreading like a virus in almost all walks of life) For various international agencies and investors, India is a Gone case, the India is no more shining  and it is like a fast fading light, which sparkled for a few years and the economy will soon find its comfort zone in the Elephant rate of growth( 2 to 3 % )

There will however be a boom in earnings for the exports, but that will not last long and their competitive advantage will be wiped out by local inflation and parallel reduction in currency values of competing export countries. 

The local industry, which is so much used to depend upon imports , along with the consumers of Imported items, will find the going tough. But the worst hit will be the Corporates who have merrily borrowed in Foreign currencies. 

I will not be surprised if a good number of our industrial units fall into the lap of overseas strategic investors .

So what is the solution? .... For that let me think and say something in my next blog !!