New Delhi:
Claiming that currency devaluation encourages exports, Trade and Industry Minister Piyush Goyal rejected Wednesday that weakening the rupee would not be in the nation’s long-term interest.
He also said it is important for India to significantly expand exports and encourage investment to increase the inflow of foreign exchange into the country.
“There is a large group of people who believe that you should devalue your currency so that you become competitive in the export market…
“I can assure you from my own experience and my contacts with large parts of the industry across the board that the devaluation of the rupee or the weakening of our currency is in fact detrimental to the interest of our nation, to our growth story and for our ability to be competitive in the long run,” said Mr Goyal at an event to mark the 15th Day of Civil Services.
The minister added that devaluation raises import costs, brings inflation to the country, drives up interest costs and makes products uncompetitive as India is import dependent for commodities.
He added that healthy exports, investment and remittances are helping to boost foreign exchange reserves, which amount to more than $600 billion.
Exports help earn precious foreign exchange and keep the rupee stable, he noted.
The minister further said that exports rose to $18.5 billion in the period from April 1-14.
India’s pharmaceutical exports have huge potential, reaching $200 billion in the coming years, Goyal noted.
On free trade pacts, he said these agreements are a “two-way street” and help both sides.
Earlier at the event, Commerce Minister BVR Subrahmanyam emphasized the need to rewrite old laws, rearrange processes and embrace technology to increase the size of the Indian economy to $30-40 trillion in the coming years.
“We also need to improve the capabilities of our people in our systems… We also need a change of mindset,” he said during a session titled ‘Vision India @2047 – Governance’.
The secretary asked the officials to reorganize their departments and make them world-class so that India becomes a world power.
“Rewrite the laws… embrace technology because it is the enabler and absolutely essential. Standardize processes and develop SOPs (Standard Operating Procedures) across all operations,” he said, adding: “We need to work on growth that is led by the private sector.” He called for a focus on the needs of the private sector as they require lower operating costs and logistics.
“Mark my word, India is not part of the global value chain, we are making great efforts…. There are explicit instructions in countries in western economies to get their products from other countries, it is not happening in India by the scale on which it must be done …” he added.
Speaking at the event, union secretary Sunil Barthwal said: “India still has a labor cost advantage. China has lost that advantage. We have huge demographic dividends that will contribute for 25 years.” He also highlighted the huge potential to hire more workers, as the employment rate stands at 52 percent.