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Falling rupee, what it means to you?

Discussion in 'Hangout' started by Sat-Chit-ananda, Jul 17, 2013.

  1. Some oil reserves could have done the trick...inspite of assam oil reserve(huge)we can hardly use it(govt says crude form is soo expensive to extract its economically viable to import)..
    I really wonder the vast land and sea area our country has theres no mineral, fossil fuel or atleast something for the benefit of our nation..

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  2. jayadev

    jayadev Esperto

    Messages:
    1,057
    Kannur, India
    Kannur
    Grande Punto 1.3 90 HP
    Ever wondered why British Gas (BG) is doing same in Gujarat/Rajasthan area since decades ?


    Nevertheless do we have any single home built electronic device in domestic use,We almost import everything in electronics components.

    Long back we used to Keltron Television which are just for memories now.

    What boomed was beverage industry.IMO.
    3 people like this.
  3. Now the blame game starts

    On a day when the Reserve Bank of India engineered a 223-paise pullback of the rupee to 66.60, outgoing governor D Subbarao squarely blamed the government for the domestic currency's travails which he attributed to domestic structural factors. He also said the loose fiscal policy adopted by the government between 2009-2012 had constrained the RBI's monetary policy.

    Subbarao chose his address under the 10th Nani Palkhivala memorial lecture — his last public address — to tear into the government for misreading the economy. He lambasted the finance ministry's attempts to impinge on the RBI's autonomy through the Financial Stability and Development Council.

    The governor came down strongly on the attempt by certain sectors to attribute volatility to 'misbehaving markets' and which he compared with God.

    The financial markets on their part had responded extremely positively to the RBI's move to lend dollars to state-owned oil companies. The rupee's gain from its historic low of 68.83 on Wednesday bolstered equity markets with the sensex rising 405 points.

    The governor also took a direct dig at finance minister P Chidambaram who in October 12 very vocally expressed his disappointment with the governor for not abiding by his call for a rate cut. The FM had said that "if the government has to walk alone to face the challenges of growth, we will walk alone". Subbarao said that "I do hope Chidambaram will one day say: 'I am often frustrated by RBI, so frustrated that I want to go for a walk, even if I have to walk alone. But thank God, the Reserve Bank exists'."

    Reacting to the attack, the finance minister said in Delhi that Subbarao's comments were no different from what he said on Tuesday. Speaking in Parliament on Tuesday, Chidambaram attributed the current woes not just to external factors, but to domestic factors allowing the fiscal deficit to be breached and the current account deficit to swell because of decisions taken during 2009-2011, a period when Pranab Mukherjee was the finance minister.

    Reiterating RBI's decision to shun capital controls, Subbarao said it had no intention of targeting a level of exchange rate. "I've heard people say that the markets are misbehaving, that the markets do not understand our policies. I think the problem is the reverse, that we do not understand the markets. We should be able to take the market behaviour as a given, not to dictate how the market behaves," said Subbarao. The governor sought to draw a parallel between his response and the conversation between Albert Einstein and his physicist friend Niles Bohr. In response to Einsten's famous comment, "God does not play dice", Bohr had said "Albert, don't tell God what to do."

    Subbarao said that if the RBI had erred at all, it was in not adopting a hawkish stance earlier. "I must admit in all honesty that the economy would have been better served if our monetary tightening had started sooner and had been faster and stronger," said Subbarao. But even here he indicated that the RBI was hamstrung by the absence of reliable data. "Just as an aside this episode highlights the importance of faster and more reliable economic data for effective monetary policy calibration," he added.

    Another regret expressed by the governor was that he chose 'baby steps' to hike rates in 2009. "I will probably be remembered as baby-steps Subbarao, but if the RBI had acted more decisively, inflation could have been brought under control much sooner." Subbarao attacked proponents of the theory that the RBI had no role to play in inflation caused by supply side shocks. "In a $1500 per capita economy—where food is a large fraction of the expenditure basket—food inflation quickly spills into wage inflation and therefore into core inflation. In rural areas where MGNREGA wages are indexed to inflation such transmission is institutionalized," he said, adding that MGNREGA had pushed up rural incomes without commensurate increase in productivity.

    "In 2008 there was enormous pressure on the RBI to emulate central banks in America and the UK, which resorted to quantitative easing to loosen monetary conditions, raise inflation expectations and lower real interest rates. We realize that the strategy was effective in the short term, but the excess liquidity has raised inflation pressures," said Subbarao. On the attempt to clip the RBI's wings by restricting its mandate to only monetary policy, he said, "We must ask repeatedly if reducing the mandate of central banks, when everywhere else their mandate is being expanded, is the right way to go." The governor also said that the government cannot use financial stability as an excuse to override the authority of financial regulators. "The governor must normally leave the responsibility to the regulators, assuming an activist role only in time of crisis."
    Last edited: Aug 30, 2013
  4. PatchyBoy

    PatchyBoy Esperto

    Messages:
    2,438
    Bangalore
    Hope the guy lives up to his reputation and sets the economy on the right track

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    Source

    All the very best Mr. Raghuram Rajan

    Rajan
  5. jayadev

    jayadev Esperto

    Messages:
    1,057
    Kannur, India
    Kannur
    Grande Punto 1.3 90 HP
    I wonder how come RBI can do anything unless we Mango man do not change ?

    We India should be having biggest amount of dead money.
  6. PatchyBoy

    PatchyBoy Esperto

    Messages:
    2,438
    Bangalore
    Like this.

    Rajan

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