The rupee problem
Ad hoc steps to check the currency’s decline must not deflect from the deeper problems
The rupee, which is currently the worst-performing(सबसे खराब प्रदर्शन) currency in Asia, is finally receiving some help from the authorities. The Union government, after a meeting with Reserve Bank of India Governor Urjit Patel, on Friday announced a list of measures(उपाय कार्यवाही) to arrest the sharp(तीव्र/तेज़) decline(गिरावट) in the currency, which has lost about 12% of its value since the beginning of the year. These include(शामिल) steps to curb the import(आयात/सूचित करना) of non-essential goods and encourage the export of domestic goods, which will help in addressing the country’s burgeoning(तेजी से बढ़ते) current account deficit(घाटा/नुकसान) that hit a five-year high in July. Other steps such as removing restrictions on foreign portfolio(निवेश सूची)investments and encouraging(उत्साहजनक/यक़ीन दिलानेवाला) Indian borrowers(उधारकर्ताओं) to issue rupee-denominated ‘masala bonds’ were also announced to facilitate the inflow of dollars and de-risk the economy from fluctuations(उतार-चढ़ाव/अस्थिरता) in the exchange rate. Further, the term limit imposed(लगाया गया) on borrowings of manufacturing companies is to be shortened further in order to curb dollar demand. The response to the move from the markets will need to be carefully tracked. Even before the official announcement on Friday, the rupee witnessed(देखा गया) some recovery against the dollar amidst hopes of favourable government intervention(हस्तक्षेप,), while stocks and bonds also recovered.
These steps to strengthen(मजबूत बनाना/प्रबल करना the rupee in the short term are welcome, given the large-scale outflow of capital from emerging(उभरते) markets to the West. These ad hoc steps to avoid an immediate crisis(संकट) in the external sector, however, should not deflect(हटाना/मोड़ना) attention from the more fundamental reasons behind the decline of the rupee. India has been unable to boost exports over the years for various reasons. At the same time, it has been unsuccessful in finding sustainable domestic sources of energy to address the over-reliance on oil imports. This has meant that the rise in the price of oil has traditionally(परंपरागत) exerted tremendous(भयंकर/डरावना) stress on the current account deficit and the currency, as is happening now. The government needs to think of a long-term plan to boost exports, preferably through steps that remove policy barriers that are impeding(बाधा डालना/रोकना) the growth of export-oriented(उन्मुख ) sectors, in order to find a sustainable solution to the problem of the weakening rupee. The depreciating(गिरावट/कमजोर) rupee is also a symptom(लक्षण) of persistently(लगातार/लगन के साथ) higher domestic inflation(मुद्रास्फीति) in India over many decades. For example, in line with vastly(बेहद/काफी ) different inflation rates in India and the U.S., the rupee has lost about 60% of its value in the last 10 years against the dollar. So this problem cannot be addressed without drastic(भीषण/बड़ा) changes in the style of monetary policy(मौद्रिक नीति) conducted by the RBI, which is an unlikely proposition(प्रस्ताव/प्रतिज्ञा). Until then, the best that can be hoped for is a steady drop in the value of the rupee without any drastic shocks to the economy.
Important Vocabulary
1.Fluctuations(उतार-चढ़ाव/अस्थिरता)
Synonyms: variation, change, inconstancy
2.Decline(गिरावट)
Synonyms: deterioration, downturn, drop, failure, fall
Antonyms: increase, rise, success, accomplishment, achievement
3.Deflect(हटाना/मोड़ना)
Synonyms: avert, bend, cover up, divert, hook
Antonyms: stay, straighten
4.Depreciating(गिरावट/कमजोर)
Synonyms: decrease, depress, deteriorate, diminish, dwindle
Antonyms: build, compliment, construct, develop, enlarge
5.Drastic(भीषण/बड़ा)
Synonyms: dire, forceful, harsh, radical, desperate
Antonyms: nice, calm, collected, easy, mild
6.Impeding(बाधा डालना/रोकना)
Synonyms: block, curb, cut off, delay, deter
Antonyms: advance, aid, allow, assist, encourage
7.Tremendous(भयंकर/डरावना)
Synonyms: amazing, astounding, awesome, colossal, dreadful
Antonyms: bad, believable, common, commonplace, conventional
8.Burgeoning(तेजी से बढ़ते)
Synonyms: prosper, snowball, sprout, blossom, bud
Antonyms: decline, decrease, die, diminish, fade
