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Opinion National Interest PoV 50-Word Edit

ThePrint On Camera Videos In Pictures

Society & Culture Around Town Book Excerpts Vigyapanti The Dating Story

More Judiciary Education YourTurn Work With Us Campus Voice

The rupee must fall harder and faster. It’s the path that will lead India to prosperity

The lesson we seem to have learnt is that we should not bother with exporting goods if our remittances and service exports can help us keep our current account deficit modest.

It has become quite fashionable in the world of economists to argue that excessive mineral wealth turns into a curse, which many times becomes a poison. The story of Croesus, who possessed gold mines and who at one time may have been the richest king in the world, but who descended into disgrace and defeat, goes back all the way to Herodotus. The easy mineral riches obtained from South America turned imperial Spain into a flabby economy that missed technological revolutions.

This writer is somewhat acquainted with Venezuela, which was a modestly prosperous country till the seventies and a net exporter of rice and meat. The oil bonanza of the seventies changed all of this. Venezuela turned into a country which imported everything and exported only oil. The curse of oil was not inevitable. It only happened because of soft governments that decided to bribe their citizenry with cheap imports. And these cheap imports occurred because of an overvalued local currency, the Bolivar. It is fascinating to note that this was the same period when countries like South Korea and Taiwan maintained an undervalued currency, which ended up being an automatic export promotion tool.

Sometimes in the history of countries, poisons other than mineral riches are possible. When we look at our own country, we are left wondering why we are such poor exporters of goods. After all, virtually every country to our east is an export success. We have tried everything. Central Planning till 1991; Liberalisation after that; and Sectoral incentivisation for the last few years. Nothing seems to work. Our export of manufactured goods remains tepid. We struggle to be competitive globally.

Perhaps there is a drug that is causing paralysis and atrophy. Recently, when I was talking to my old friend,........

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