The manufacturing industry in India, such as it is, just got a great deal more competitive in rupee terms because of the 40% depreciation over the last couple of years. That is precisely how a flexible currency ought to adjust to improve a deteriorating CAD. Beyond that, the government should focus on the enablers for manufacturing—electricity, roads, ports, telecommunication and credit—instead of sops or a prescriptive industrial policy.

Of these, electricity and credit are most important. RBI, in particular, can play a role in establishing a robust corporate bond market in India. This has fallen between the cracks at RBI and the Securities and Exchange Board of India (Sebi) and has been a costly laggard.

The most important thing to do to reduce oil imports is to eliminate oil-related subsidies. It is imperative that a proper market price be established for all petroleum products. Read More

Jyothi Shankaran

    Jyothi’s last role was as Senior Editor with the business news channel Bloomberg TV India. He also worked as News Editor at business-standard.com, the online version of the business newspaper Business Standard. Jyothi is a chemical engineer from the Regional Engineering College, Srinagar.