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Why is the RBI partial towards exporters whereas it should be helping the importers? Shouldn’t it strive for a stronger rupee?

Ideally, the rupee should be allowed to find its level vis-À-vis the US dollar. But that would be nearly impossible given the partial convertibility of rupee — it is still not convertible on capital account. Several committees and experts have pleaded for capital account convertibility as well. Be that as it may.

As for bias towards exporters, well you are right in the sense that exporters are an organised lot with there being power lobbies to plead their case. A weak rupee fetches them more rupees per dollar. Consumers are, on the other hand, an amorphous lot and do not have as much lobbying clout. And as for importers, well the main importers are oil refining companies which are largely in the state sector with no incentive to indulge in intensive and hectic lobbying. In the event, exporters are having a field day. Of course they would not admit it and instead would justify a weak rupee as being essential to compensate for very low margins in the fiercely competitive export markets.

S. MURLIDHARAN

More Stories on : Exports & Imports | RBI & Other Central Banks | For the Asking

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