Rising Re a step towards long-term growth - Economic Summit
03 Dec '07
4 min read
The 23rd India Economic Summit, jointly organised by the World Economic Forum and the Confederation of Indian Industry (CII), began this Sunday and is scheduled to end tomorrow. This year's summit, said to be the biggest ever India economic summit, will see participation from over 700 business, political and civil society leaders from 37 countries.
On the opening day the inaugural discussion revolved around the burning issue of Rupee Appreciation.
Experts sketched out how the rupee's 15 percent increase against the dollar this year has led to job losses and a slowdown in exports.
The rupee's rise needs to be seen in the context of India's long-term growth potential, argued Gerard Lyons, Chief Economist and Group Head, Global Research, Standard Chartered, United Kingdom. India's economic growth has been very impressive but will become more volatile. The country is seriously let down by its infrastructure and bureaucracy, he said. In a recent survey of global competitiveness, India slipped from 42 to 48 in a ranking of 131 economies, while China climbed from 35 to 34. Meanwhile, inflation is a “brewing problem” driven by liquidity and fuel prices – the Central Bank will have to do more to suppress this in the coming years. Lyons predicted that the rupee could appreciate stronger than 30 to the dollar, but added that India's currency should be viewed against a basket of currencies, not just the dollar. He suggested that the rupee's value is less of anissue than the need to invest in infrastructure: “Instead of talking about it, politicians need to act on it.” He added that capital markets need to be deepened and broadened, while the rupee should become a capital account convertible currency.
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