The Hindu Business Line : Stronger rupee

One cannot but agree with the views expressed in the article “Let Us Applaud the RBI” (Business Line, July 12). It is good that the RBI has allowed the rupee to face the forces of demand and supply; in the process, the c urrency has come out a true winner.

The present intrinsic strength of the rupee is commensurate with the growing power of the economy. A strong rupee has been aiding the process of economic growth. By means of augmentation demand productive activities are now encouraged and expanded. The stronger rupee has also helped control and reduce inflation.

The central bank’s new strategy in allowing the rupee a free hand has helped the economy to grow further, not only in GDP terms but also in resilience and maturity. A firmer rupee has drawn lot of interest in the Indian economy from foreign investors, in general, and FIIs, in particular.

The maturing of the stock market is also a great achievement. Interest rates have hardened a little in recent months and the RBI must continue with its present policy stance to moderate interest rates. If interest rates are reduced a little and the rupee continues to enjoy its present freedom, there will be substantial consumption growth, which will act as a spur for expansion of production on all fronts.

India’s bullish economy will grow by leaps and bounds if we make the rural economy also equally bullish. This may call for most imaginative economic policies for the farm sector. It is necessary to upgrade agriculture also into an industry so that players in this sector evince more interest in farm activities. A total overhauling of marketing strategies for agricultural products will go a long way in this regard.

The article rightly states that the RBI is on the correct course and must continue with this policy stance as it will prove to be a winning strategy. However as far as farm sector is concerned, policy reforms are an urgent necessity and must be supplemented by real financial inclusion of the players of farm sector.

K. K. Ammannaya Udupi