For the past several months we have been witnessing a steady fall of the rupee against the dollar. While there is all the harp around why it is falling, when it will stop and what should be done, it is time we come to the realities.
When there is mounting import bill chasing dollars and fleeing foreign capital what else do we expect to happen?
While we do not have control over the prices ruling the main components of imports, viz. oil and gas, there is plenty of room on the other side. We can not go around talking about how good our economy is and sending invitations to foreign capital when the reality is quite different. When the country is reeling under pressures from policy failures the economics for investors is not warranted. Two of the most important - power sector and infrastructure policies seem have remained only on paper; subsidy issues, land scams, coal shortages, telecoms scams and project implementation delays, among others, have been the key reasons for lower economic growth. Fiscal deficits and rising inflation only make the matters worse.
In this environment why would an investor put money in an asset when he is not sure of his return? Leave aside the foreign investors, even the local investment appears tentative. So sending invitations to individual foreign investment would not make much difference. Road shows aside, what we need to show is a decent growth rate.
While we acknowledge that there are external factors, such as weak developed markets and rising oil prices, affecting the local economics, there are a number of things that can be and should be done in-house. Only then invitations for foreign capital make sense. Rather we do not need to invite as investors from the developed markets are ever alert in looking for opportunities especially when their own local market is not yielding their expected returns.
What foreign capital is currently asking is: show me the policies, governance and the growth, and I will come running, not for your sake, but for my own.
India has a lot of potential to grow, if only right policy decisions are taken. The more we delay, the longer we will talk about how rupee is falling, how we have fiscal problems and wonder why foreign capital is not coming.
All said, it appears that none of the decision-making would come until the elections are over. So let's talk about something else until then rather than keep giving free advice.
When there is mounting import bill chasing dollars and fleeing foreign capital what else do we expect to happen?
While we do not have control over the prices ruling the main components of imports, viz. oil and gas, there is plenty of room on the other side. We can not go around talking about how good our economy is and sending invitations to foreign capital when the reality is quite different. When the country is reeling under pressures from policy failures the economics for investors is not warranted. Two of the most important - power sector and infrastructure policies seem have remained only on paper; subsidy issues, land scams, coal shortages, telecoms scams and project implementation delays, among others, have been the key reasons for lower economic growth. Fiscal deficits and rising inflation only make the matters worse.
In this environment why would an investor put money in an asset when he is not sure of his return? Leave aside the foreign investors, even the local investment appears tentative. So sending invitations to individual foreign investment would not make much difference. Road shows aside, what we need to show is a decent growth rate.
While we acknowledge that there are external factors, such as weak developed markets and rising oil prices, affecting the local economics, there are a number of things that can be and should be done in-house. Only then invitations for foreign capital make sense. Rather we do not need to invite as investors from the developed markets are ever alert in looking for opportunities especially when their own local market is not yielding their expected returns.
What foreign capital is currently asking is: show me the policies, governance and the growth, and I will come running, not for your sake, but for my own.
India has a lot of potential to grow, if only right policy decisions are taken. The more we delay, the longer we will talk about how rupee is falling, how we have fiscal problems and wonder why foreign capital is not coming.
All said, it appears that none of the decision-making would come until the elections are over. So let's talk about something else until then rather than keep giving free advice.
