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heading for a
(A small outline as to why India might be silent storm & a special focus on the falling rupee)
Export growth has come to a virtual halt over the past year.
The top 10 borrower groups now account for 13 % of banks' outstanding loans.
2013 Deena Zaidi. All rights reserved.
Dollar Strength
70
40
20
10
2007-2008
2008-2009
2009-2010
YEARS
2010-2011
2011-2012
2012-2013*
Loss of confidence amongst investors resulting in market panic Falling rupee leading to costlier commodity imports in local markets Failure to address the issue at the right time by RBI Foreign Institutional Investors who are buyers suddenly might turn into sellers causing RBI intervention causing a market stir
The Times of India says the rupee is "the most battered" of the Asian currencies and its fall can be attributed to India's "significantly larger current account deficit". The Hindustan Times feels the rupee's fall can "end up fanning inflation. The Tribune, however, says that Indian exporters, including IT firms and drug manufacturers, are likely to benefit from the fall. The Asian Age believes the currency's record decline should be a "wake-up call" for the government which must "stop paying lip service" and take concrete actions.
Source: just-a-few-lines.blogspot.com
Source: rediff.com
Is it a Fools Paradise?
Reacting to a financial crisis and saying all is well is more like turning a blind eye towards an approaching storm. The markets are in panic because there is information asymmetry. The continuous fluctuation in prices of gold, oil and exchange rates reflect that something is not going right in the Indian economy. It is true that the global crisis impact has its effects but corrective measures without corruption & a strong political stability can lead to a stronger economy. India with its strong central bank, RBI, has all that it takes to get the country out of the crisis , if the need arises. But the action should be prompt and perfectly timed since wait and watch policy has ruined many nations in the past.
2013 Deena Zaidi. All rights reserved.