Dr Arvind Subramanian, Chief Economic Advisor, Ministry of Finance, said that foreign exchange competitiveness is critical for growth and called for a rupee exchange rate that would promote exports. He was speaking at the session 'India’s meta-challenges and solutions' at the Annual Session 2017 of the Confederation of Indian Industry (CII) on ‘Future of globalisation: Can India lead?’ in New Delhi.

Championing the cause of competitive exchange rates, he said that this factor is a very “important instrument to maintain competitiveness and boost growth.” Dr Subramanian said that the strong exchange rates over the past two years are hugely impacting exports and he stressed that it is a misguided notion that strong currency rates are identical to national growth and economic strength. He said that India Inc. should be more vocal on exchange rate issues.

The Chief Economic Advisor said that for India to grow at a rate of 8%, global markets need to be open and India needs to champion globalisation internally. India can make further inroads into the global markets, according to Dr Subramanian, by multilateral and regional trade agreements. There may not be rapid increase of global trade but there will be no rapid declines either.

Dr Subramanian maintained that India has to keep its focus on export of products despite the various interpretations of globalisation that is going across the world. He said that India sending out Foreign Direct Investments (FDIs) is a very healthy sign for the economy. With almost USD 65 billion FDI coming to India, Make in India can be globally competitive. At the same time, it will be difficult to sustain this initiative if other countries raise trade barriers.

Mr Vinayak Chatterjee, Chairman, Feedback Infra Private Limited said that while some industries benefit from a weak exchange rate, some also benefit from a strong one. He added that though the pace of digitization across the country has gained, India must institute a simple and transparent electricity distribution system and resolve the twin balance sheet problem.

Mr Chatterjee said that the quality of healthcare and education delivered by the governments is not taking the country forward. Drastic fall in capital and infrastructure formation is a huge area of concern as are the growing challenges of urbanization, he stressed.

New Delhi

28 April 2017