NEW DELHI: 01 Sept 2013:
The Social Democratic Party of India, (SDPI), has expressed deep concern and anguish at the slump in the Indian economy and the dip in investors sentiment which appears to be in shambles with rupee plummeting down everyday to inaccessible depths. The currency has dropped over 23 per cent since April and had touched a low of 68.80 to a dollar earlier this week.
SDPI national president Mr. A. Sayeed in a statement said it is hard to restore confidence in the rupee under the present conditions as for that a major perquisite is the restoration of faith in the Congress-led UPA government. With that being a remote possibility the rupee, and the stock markets, are set to remain volatile till a new government is in place after the next parliamentary poll.
Mr. Sayeed wondered when Bangladesh and Indonesia can control the downfall of their currencies, why can’t India? The simple answer is that neither the Reserve Bank nor Mr. Chidambaram are accountable to the Prime Minister or to the tax-paying citizens. They simply dupe the citizens and enjoy enormous salaries and perquisites.
He said the UPA Government can still minimise the damage if it has the good sense to use the one option which has a very good chance of succeeding. And that is to go to the International Monetary Fund, (IMF), to bolster its dollar kitty. Speculative activity in the currency markets will be substantially curbed once the government has the large cushion of the IMF billions. Admittedly, the IMF loan will entail some conditions. Which again could prove salutary for the economy.
He recalled how the economy had received the booster shots after that Forex crisis, which led to the dismantling of the decades-old license-quota-permit raj under the World Bank-IMF pressure. This time around, the crisis has assumed dire proportions due to the mismanagement of the economy. While reforms were put on the backburner, there was a huge expansion in expenditure on account of giveaways aimed at winning voter-support.
The statement said that the precarious state of the nation’s finances ought to have persuaded the ruling party to delay the populist measure. The government was wrong in not creating a bigger Forex reserve during the boom years, especially after the liquidity easing by the US Fed in the wake of the global financial crisis. Had it mopped up dollars from the market between 2008-2011, we would have been in a better position to ride through the crisis triggered by the threat of liquidity tapering by the Fed. Now it is too late to stave off the crisis through tinkering of the customs rate or by imposing niggardly restrictions on the outgo of Forex by corporate and individual taxpayers. Going to the IMF can help stem the crisis.
If the fear of criticism is what deters the government from doing so, it should remember that each day when the rupee loses its value and the Sensex drops a few hundred points, the government is not exactly winning praise either from the opposition or the ‘aam aadmi.’ At least, the IMF loan would help boost confidence in the rupee and stop the bleeding on the bourses, the statement added.
Mr. Sayeed said maybe some wrong decisions were taken when Pranab Mukherjee was Finance Minister but these should have been immediately reversed when P. Chidambaram took over as Finance Minister. The massive tax notice served on Vodafone scared the foreign investors and maybe was responsible for FDI coming into India. But then two years have passed since then and this is a long period for any government to take effective measures to set a nation’s economy right and reduce the Current Account Deficit (CAD). It is not a wise thing to hold any past Finance Minister solely responsible for the present economic ills of the country.
He said that the country has to regain the value of rupee and appropriate fiscal policies are to be formulated from government side. This is not the time for a post-mortem for the cause and the nation must stand united in opinions for getting the problem solved which pertains to the livelihood of the people. Due to any such adversity the elite and financially well to do always escapes damages. Everything is going from vote bank politics. Every issue is politicized. If the opposition blames the government for false doing then why did it support the policies during 2007-09? The truth, none of them (government and opposition) is bothered about growth but yes for vote growth. Also none of them can forecast what will be the impact of current policies, he added.