ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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The Hidden Lesson

The Fall of the Rupee

The euro crisis is a scapegoat for the rupee's travails. It is inflation, excessive consumption and fiscal profligacy which are making the rupee vulnerable to external shocks.

As Greece, Spain and possibly Italy face a grim fiscal and financial situation, as experts and ­analysts pour their venom into op-eds of newspapers in the west and as the European Union (EU) encounters its toughest challenge so far, India also in her own way is experiencing a bit of turbulence.

India, like China, never experienced the full wrath of the Asian financial crisis in the 1990s and was insulated to some extent from the recessionary downturn in the United States (US) in 2008. We did grow quite handsomely in a world when zero and marginal growth rates were the best outcomes in affluent countries. We have left the 3% rate of growth so far behind that nowadays even a 6% annual rate of growth makes us morose. We forget that we continue to be the second or third fastest growing nation in the world.

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