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This refers to the Finance Minister, Mr P. Chidambaram’s caution against the challenges posed by copious capital inflows into the country (Business Line, December 8).

Rising Gross Domestic Product in India must attract foreign investments and create more employment opportunities in the country.

But practically speaking, the increasing foreign investments have created a sort of imbalance in export industries such as leather, handicrafts, and textiles.

For instance, the rising value of the rupee, in part due to the increasing foreign exchange reserves, has resulted in the decline of export orders and lay-offs of workers in these industries.

The country must simultaneously increase the demand for foreign exchange to push up the essential imports and thereby ensure a reasonable foreign exchange rate which will be conducive for both exports and imports.

S. Ramakrishnayee Ranipet

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