A new week has dawned, and the Indian rupee has continued its precipitous decline:
The rupee was down another 0.5 percent against the dollar on Monday and a further 0.6 percent in early trading on Tuesday, to 66.43 rupees to the dollar, bringing its decline since early May to a little more than 20 percent.[…]Exporters would be expected to benefit from a cheaper rupee. But poor roads, restrictive labor laws and heavy regulation have left India with a manufacturing sector that, although stronger than a decade ago, still struggles to compete with China and other East Asian economies. Indian companies rely heavily on imports for materials and equipment that they cannot buy within India, and the costs of those imports are surging as the rupee falls, limiting gains in Indian competitiveness.
Here’s some unsolicited advice to Indian politicians running in the upcoming elections: Run on a platform of making India a great industrial nation. Vow to create millions of jobs for ordinary people with a combination of a massive program bringing public and private sector investors together to create a world class infrastructure and by attracting hundreds of billions of dollars in foreign investment.Win votes in West Bengal by promising to make Kolkata a trading and manufacturing hub for Burma, Bangladesh and northeast India. Win votes in Tamil Nadu by promising to push measures through to increase foreign investment there. Win votes across North India among the masses by attacking past politicians for failing to create jobs that ordinary people can get. Fancy high tech and call center jobs are all very well, but mean nothing to poorly educated, non-English speaking people in poor rural areas.
Win votes and financial support from techies by pointing out how the rise of a manufacturing economy in India will provide huge new business opportunities for domestic tech firms. Win votes everywhere by promising to use the tax revenues from manufacturing to continue building infrastructure, improving basic education, and providing sustainable food security.Build a consensus around the idea that India must be a manufacturing giant to provide economic security for its citizens and enhance India’s power in the world. Show how manufacturing has helped China lift people out of poverty faster than India has—and promise that in India, learning from China’s experience, this can be done at less cost to the environment.It’s a way to build a powerful political movement while serving the highest interests of the Indian people and their state.Good luck![Photo of Mumbai courtesy Shutterstock.]