by Dr. Sanjay Goel
A poverty-stricken country has to manage inflation as a priority but growth can not be undermined. To keep the inflation low, the government has been raising the interest rates and lowering the exchage rates. Now, the demand is being forced downwards, and supply is being glutted by making your own exports uncompetitive. I think, this is the most regressive strategy that I have ever heard of. When you need growth, you have to live with inflation to boost the demand, which in turn boosts supply. And you have to weaken the currency to boost your exports to surface yourself in geo-economic power-game, which gives you major strategic advantages. Every country did this when they needed, US in 1900, Japan in 1950s, China till date. So, India should also keep its currency weaker.
(Dr. Sanjay Goel is a Fellow from Indian Institute of Management, Bangalore (IIMB) and has 15 years experience in Business consulting. He has also taught at the LBS Academy of Administration (IAS) in India)
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