We need to get the govt out of business faster .. atleast one thing we already have in place, which we didn't have earlier in 1991. That the Rupee floats freely.
Hence, if anyone withdraws dollars now, he pays dearly for it. Anyone who sticks to using imported products, pays dearly for it.
Anyone who exports, gets rewarded. Anyone who remits, gets rewarded.
Market reacts quickly: doesn't need political decision to reset a "pegged" rate of currency. Imagine, if we had a rupee pegged at the level of 45 to the USD, the effect would have been a sudden decline in foreign exchange reserves (because 45 could have been defended only by spending a lot of dollars from reserves).
Now, RBI has a choice: It can intervene if it wants. RBI has a stated mandate to reduce the volatility in the rupee rate; but doesn't take a view at the level.
Market supply and demand ensures that if some rich people only want imported luxury cars, they are willing to pay at the rate of 55; not at 45. Hard working NRIs get paid their due. Encourages people to earn dollars outside.
FDI has a price advantage at this point of time.. local prices re-adjust to the new currency rate overtime. So, NRIs are making a killing buying property in India.
-----
What are we still missing?
Do to Diesel, what we did to USDINR .... no point subsidizing luxury cars running on diesel. But before that we need to introduce US style competition to the oil markets.
Reliance is biggie and can beat the $hit out of public sector oil companies, but it's the only one (Essar is a much smaller player and cannot compete nationally).
In fact, it is entirely possible that the competitive price of diesel is only marginally higher than the current "subsidized" price ... once competition squeezed inefficiencices out of IOC, HPCL and BPCL.
Next we need to hit the irrationality in the fertilizer markets ... subsidies must go directly to the farmer, not to middlemen.
Even the wheat and rice subsidies should go directly to those who need it. Rice sells are Rupees 2 per kg !!! and Wheat at Rs 4 per kg !!!
It's better to pay the poor people at Rs 10 per kilo for every kg of rice they are entitled to .... and free markets should sell rice at Rs. 12 per kg.
In fact, stress forces action .. even Narasimha Rao govt was a minority govt... and no could have imagined the reforms it did, while maintaining a minority govt... supported by who else.. the LEFT parties.
We should just keep our heads down and keep working .... India is one-fifth the mankind.
The fate of mankind is drastically linked to that of India. Externalities can jump up and down, blow hot and cold .... but everyone one knows... the weight India carries in terms how the world evolves in the coming years.
That is why.. India does well or bad.. it is news.
Hence, if anyone withdraws dollars now, he pays dearly for it. Anyone who sticks to using imported products, pays dearly for it.
Anyone who exports, gets rewarded. Anyone who remits, gets rewarded.
Market reacts quickly: doesn't need political decision to reset a "pegged" rate of currency. Imagine, if we had a rupee pegged at the level of 45 to the USD, the effect would have been a sudden decline in foreign exchange reserves (because 45 could have been defended only by spending a lot of dollars from reserves).
Now, RBI has a choice: It can intervene if it wants. RBI has a stated mandate to reduce the volatility in the rupee rate; but doesn't take a view at the level.
Market supply and demand ensures that if some rich people only want imported luxury cars, they are willing to pay at the rate of 55; not at 45. Hard working NRIs get paid their due. Encourages people to earn dollars outside.
FDI has a price advantage at this point of time.. local prices re-adjust to the new currency rate overtime. So, NRIs are making a killing buying property in India.
-----
What are we still missing?
Do to Diesel, what we did to USDINR .... no point subsidizing luxury cars running on diesel. But before that we need to introduce US style competition to the oil markets.
Reliance is biggie and can beat the $hit out of public sector oil companies, but it's the only one (Essar is a much smaller player and cannot compete nationally).
In fact, it is entirely possible that the competitive price of diesel is only marginally higher than the current "subsidized" price ... once competition squeezed inefficiencices out of IOC, HPCL and BPCL.
Next we need to hit the irrationality in the fertilizer markets ... subsidies must go directly to the farmer, not to middlemen.
Even the wheat and rice subsidies should go directly to those who need it. Rice sells are Rupees 2 per kg !!! and Wheat at Rs 4 per kg !!!
It's better to pay the poor people at Rs 10 per kilo for every kg of rice they are entitled to .... and free markets should sell rice at Rs. 12 per kg.
In fact, stress forces action .. even Narasimha Rao govt was a minority govt... and no could have imagined the reforms it did, while maintaining a minority govt... supported by who else.. the LEFT parties.
We should just keep our heads down and keep working .... India is one-fifth the mankind.
The fate of mankind is drastically linked to that of India. Externalities can jump up and down, blow hot and cold .... but everyone one knows... the weight India carries in terms how the world evolves in the coming years.
That is why.. India does well or bad.. it is news.