Economic
Highlights
New Delhi, 14 June 2013
Rupee
BOON FOR FOREIGN INVESTOR
By Shivaji Sarkar
India’s economy
has few friends, many disguised pals and innumerable enemies. Wherein we need
to understand whether World Bank prescribed diagnosis of seeking foreign
investment is a boon or fraught with innumerable risks. Also realise some super
powers are eyeing India
to exploit and not help it.
Unfortunately,
Finance Minister Chidambaram’s yet another assurance of “reforms” sounds good
but the path hackneyed. Merely a diplomatic approach at not annoying any player
might appear gentlemanly but are our interests protected? Is it happening?
The economy
is in shambles. Everybody, Prime Minister Manmohan Singh, Planning Commission Dy
Chairman Montek Singh Ahluwalia and Chidambaram agree. But none want to give
hard medicine doses. Can the economy be quarantined for some time, say five
years? A tough and difficult decision with global giants breathing down ones
neck.
The weakening
of the rupee might is testimony that India is losing out against powerful
western nations machinations who are transferring their problems to India and
other developing nations, Brazil, Chile, Mexico, South Africa and Turkey, all
with high current account deficit
While Chidambaram
says there is no reason to panic, we need to look at US, UK and Euro
Zone. Despite severe crisis, worse than India, their currency maintains
high value. This is not because of any intrinsic strength but because they transferred
problems to far-off regions which are dependent on exporting to them. Today, they
have cleverly announced policies curbing imports, notwithstanding exports from
US-Euro zone did not fall.
Undeniably,
a global probe is needed on how these countries conspired to shatter developing
nations economies to sustain their own, leading to high inflation, above 6%,
except Chile.
Yes, with weakening rupee India
is importing inflation and lack of measures to check prices have added fuel.
Recent UN
reports reveal that international (mostly western) speculative betting in food
grains has caused severe price hike despite no supply side problem. Whether it
is a corporate or concerted Western powers move, it helps given that the purchasing
power capacity decides the intrinsic value of the currency. The US has cleverly done so while India and other
nations have faltered. Thus, inflation helps these economies create conditions
for demanding relaxation of their activities therein.
With the US carefully remaining in the backdrop it got its
corporate lobbies and lawmakers to raise patents issues and domestic laws
against India to carry
forward their onslaught on India’s
economy.
We need to investigation
on how some Indian pharmaceutical companies have to pay heavy penalty for no
fault of theirs. New Delhi
has been unable to challenge US and European laws which give their companies
undue weightage in dealings against global competitors.
While Ranbaxy
and Sun Pharma were forced to pay $ 500 million penalty each, the FDA is protecting
Pfizer. Bluntly, the generic drugs produced by them had only minor patent
infringement. But the US
courts and FDA are known to be tough with foreign companies including European.
These are
not isolated incidents. Last week US corporations, lawmakers and administration
officials accused India
of “unfair, restrictive, protective and discriminatory business practices
against American entities” and sought President Obama’s intervention. A well
timed move, just before Secretary of State John Kerry’s visit to India for the
annual strategic dialogue.
Said a 16
business organizations consortium, “It is time the government of India ended
discrimination against our nation’s exporters…. If this engagement is not
fruitful we ask the US
government to respond purposefully using all available trade tools and diplomatic engagement”.
Added a
Senator Rob Portman said, “We have lot of concerns about India, their
emerging market access barriers, and protectionist measures”. Two others batted
for the pharmaceutical industry accusing New
Delhi of inadequate intellectual protection and
shutting US companies out of its markets (read Walmart and insurance).
Clearly,
corporates are furthering their interests through its Government in countries.
One company actively organized a coup against a South American country. Indeed,
alarming. India
needs to learn from this and avoid machinations of these powerful nations.
Pertinently,
one needs to listen to a CIA agent on how the US corporates and Government work
in tandem and use different Administration arms to chastise its adversaries.
In the Euro Zone
Arcelor Mittal is being constantly targeted in Belgium
and France.
India
needs to probe whether this is a racial discrimination.
Moreover, the
ramification of annulling land ceiling laws is also being viewed. While Emaar has used foreign funds for
acquiring land, GMR is flouting all norms on its Delhi airport contract. These companies are
stated to have blessing of political circles. Ditto how global players work.
Thus, if the
rupee is losing out it should be not be seen as a domestic phenomenon as a weak
rupee suits large corporate investors. They can make less real investment and
acquire fortunes. In actual terms India is getting less foreign
investment and is forced to compromise. Thereby, losing its critical assets for
peanuts.
The battle of
the rupee cannot be fought within India’s boundaries but has to be
taken offshore and the international currency system challenged. We can seek
help of BRICS and ASEAN to rectify our currency market. There is no reason for
it to remain tilted towards Western players. The world needs a level playing
field lest new colonialism is perpetuated through artificially strengthened
currencies.
Additionally,
there are many ways to reform the economy. The Government needs give up its
preference for foreign investment till the rupee reaches a proper level, around
Rs 40 to a dollar. Till such time inviting foreign investment in any form is
not a lucrative but a losing proposition as it imposes unwanted penalty in
rupee terms on Indian firms.
Along-side India should
shelve investment proposals. Chidambaram is incorrect when he says he does not want
to compress expenditure, he needs to cut bureaucratic expenses, particularly babus perks and many other unnecessary Government
expenses.
In sum, new
reforms have to create an atmosphere of protection, challenge international
laws, WTO provisions, patent system for large conglomerate and powerful
countries. Reforms have to go beyond petty politicking. Undoubtedly, a difficult
task but we need to take the first step to becoming an international player.
----- INFA
(Copyright, India
News and Feature Alliance)
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