Dismissing the contention that currency devaluation encourages exports, Commerce and Industry Minister Piyush Goyal on Wednesday said weakening of the rupee would not be in the nation’s interest in the long run.
He also said it is important for India to expand exports significantly and encourage investments to increase foreign exchange inflows into the country.
“There is a large pool of thought which believes that you need to devalue your currency so that you become competitive in export market…
“I can assure you from my own experience and my engagements with large sections of industry across the board confirms that rupee devaluation or weakening our currency is actually detrimental to our nation’s interest, to our growth story and to our ability to be competitive in the long run,” Mr Goyal said at an event to mark the 15th Civil Services Day.
The minister added that devaluation increases cost of imports, brings inflation into the country, pushes up interest cost and makes products uncompetitive as India is import-dependent for raw materials.
He added that healthy exports, investments and remittances help in growing foreign exchange reserves, which stand at over $600 billion.
Export helps in earning precious foreign exchange and keeps the rupee stable, he noted.
The minister further said exports during April 1-14 have increased to $18.5 billion.
India’s pharma exports hold huge potential and can increase to $200 billion in the coming years, Mr Goyal noted.
On free trade pacts, he said these agreements are “two-way traffic” and help both sides.
Speaking earlier at the event, Commerce Secretary BVR Subrahmanyam emphasised on the need to rewrite old laws, recast processes and embrace technology to boost the size of Indian economy to USD 30-40 trillion in the coming years.
“We also need to improve capacities of our people in our systems…We also need a mindset change,” he said at a session titled ‘Vision India @2047 – Governance’.
The secretary asked the civil servants to re-engineer their departments and make them world class so that India becomes a global power.
“Re-write the laws…embrace technology as it is the enabler and absolutely essential. Standardise processes and develop SOPs (standard operating procedures) for all activities,” he said, adding, “We should work for growth which is led by the private sector.” He called for focusing on the needs to private sector as they need lower cost of business and logistics.
“Mark my word, India is not a part of global value chain, we are making great efforts….There are explicit instructions in countries in western economies to source their products from other countries, it’s not happening in India through the scale it should happen…,” he added.
Addressing the event, Union Labour Secretary Sunil Barthwal said, “India still has wage cost advantage. China has lost that advantage. We have huge demographic dividends which will contribute for 25 years.” He also stressed on the huge potential of engaging more workers as labour force participation rate stands at 52 per cent.