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Band-Aid is not a cure

Since both the rupee and forex reserves are under deep pressure at the moment, Therefore, these steps will be considered appropriate in order to handle it immediately. But it is not a sustainable cure.

When a deep injury has occurred, a Band-Aid may be necessary. Despite this, the truth remains that a Band-Aid is just a way to get instant relief. Necessary medicines have to be given to heal the wound. So the same thing can be said about the steps taken by the Government of India amidst the falling price of the rupee and the increasing pressure on the foreign exchange reserves. Since both the rupee and forex reserves are under deep pressure at this point of time, these steps would be considered appropriate to handle them immediately. Under this, the government has increased the limit for private companies to take loans in dollars in this financial year to $ 1.5 billion. Apart from this, banks in India have been given the right to adopt a flexible approach in the matter of interest rate to attract investment from NRIs. However, looking at the trends in the global market today, it is not possible to say with certainty how much dollar these steps will really bring to India. Despite this, the government has made efforts from its side, it can definitely be said.

However, despite this the fact remains in its place that it is not a sustainable way of handling the Indian currency or keeping the foreign exchange reserves position at a healthy level. A healthy situation would be that India strikes a balance between imports and exports. If necessary, a policy of reducing the import of non-essential items can be adopted. Increasing exports is not an easy goal, but efforts should be made to achieve this. Moreover, if Indians working abroad can be encouraged to remit money continuously, India will be more able to deal with difficult situations. For the time being, the steps that have been taken may not be long-term. Then there will also be the risk of a sudden dollar runaway in them. In the event of migration, the purpose for which this step has been taken will be defeated. That is why it is important that the problem be treated permanently.

Shubham Bangwal

Shubham Bangwal is a Senior Journalist at You can follow him on Twitter @sb_0fficial
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