![]() In a perpetually depreciating rupee scenario, even exporters tend to defer repatriation of export proceeds. India has been attracting only hot money. Which serious long-term investor will choose India? Only non-serious short term investors pump money and exit quickly after making a buck. Return earned on truncated capital in 40 years may not even recoup the losses. So, 90 per cent of the investor’s capital would be wiped out while repatriating the funds abroad. Ten dollars invested in 1981 (dollar/rupee 8) would be reduced to 1 dollar today (dollar/rupee 80). Optimal foreign investment is perpetually eluding India. But what about return on investment? India has lost out on this parameter and has missed the bus. She has never defaulted on international commitments, nor ever found it necessary to impose restriction on foreign outward remittances. India’s track record on safety and ease of repatriation has been exemplary. This principle is universally accepted, be it in the currency, equity, or debt markets. Every foreign investor looks for safety, ability to repatriate and return on capital. A perpetually depreciating currency dampens India’s investment climate. And now in 2022, PM Modi’s government has depressed the rupee to a record low of Rs.80 per dollar. Then PM Manmohan Singh left the dollar battered at Rs.62.33 in May 2014. PM Vajpayee’s government took the dollar to Rs.45.32 in 2004. PM Gowda’s government took the dollar to Rs.36.31 in 1997, and PM Gujral’s government left the dollar at Rs 41.26 in 1998. In 1996, PM Narasimha Rao’s government left the rupee bruised at Rs.35.46 per dollar. In June 1991, PM Chandrashekhar’s government, within a short span of six months, depreciated the rupee to Rs.22.74 per dollar. Singh’s government took the dollar to Rs.17.50. In 1989, PM Rajiv Gandhi’s government boosted the dollar to Rs.16.23. In 1984, the dollar had climbed to Rs.11.36 when PM Indira Gandhi left in tragic circumstances. The path has been unidirectional and irreversible. Till today India continues to pay a hefty price for the dollar. IMF imposed stringent conditions and sealed the rupee’s fate. India’s GDP was then barely $190 billion. ![]() On 9 November 1981, PM Indira Gandhi’s government, after returning to power in 1980, borrowed a hefty 5 billion SDR, equal to $6.25 billion, from the IMF. In 1980, PM Charan Singh’s goernment strengthened the rupee further to Rs 7.86 per dollar. In 1979, PM Morarji Desai’s government bolstered the rupee to Rs 8.13 per dollar. When Mrs Gandhi left office in March 1977, the rupee had depreciated to 8.74 per dollar. The Opposition then alleged that devaluation was a sell-out to America and the World Bank. The government yielded to bash the rupee. The trigger point, though, was the PL-480 agreement with the USA by which India received discounted food during the early 1960s. On 6 June 1966, PM Indira Gandhi’s government devalued the rupee to 7.50 per dollar amid a financial crisis, in the aftermath of the wars with China/Pakistan, and a major drought in 1965-66. How did it happen? In 1964, Prime Minister Jawaharlal Nehru’s government left the dollar/rupee exchange rate fairly stable at Rs 4.76 to the dollar. From eight to 80 rupees to a dollar, in 40 years! It’s a free fall for the rupee.
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