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Across the Aisle: Five steps to Nirvana

13 5 20

The government has tacitly acknowledged that the economy faces a crisis. The ‘crisis managers’ met with the Prime Minister on September 14, 2018. The governor of the Reserve Bank of India (RBI) was summoned to attend the late evening meeting. Two things were wrong about his attendance: the publicity surrounding the event and the post-meeting announcements. Why have a governor (and whither his autonomy) if the government — and no less than the finance minister — will make the announcement on measures to boost the rupee?

Be that as it may, let me focus on the five measures to ‘boost the rupee’.

The objective of the five measures is to enhance the inflow of foreign currencies (up to $10 billion) to balance the outflow of foreign currencies and prevent the depreciation of the rupee. The catch is that foreign investments do not flow into or out of a country at the command or whim of the government of that country. They follow the command of their owners or managers who will make their own judgments about putting their money in a country.

Let me list the five measures and ask the question, will they work?

1. Mandatory hedging conditions for infrastructure loans will be reviewed.

When a borrower borrows in foreign currency, he has to repay in that currency. Infrastructure loans are normally of........

© The Financial Express