The country seems to be sliding into a new adversity with the rupee hurtling all-time low against dollar. There could be several reasons behind the tumbling of rupee, but the Central government’s policies are solely responsible for this economic mess. The government’ inclination towards spawning populist schemes for the last two-three years has sent rupee into a tailspin. Implementing these vote-oriented schemes, nobody bothered to ponder over Current Account Deficit (CAD) reaching alarming stage. The government was trying to checkmate the spiraling deficit by dint of foreign investments for the last few years, but its strategical slackness and poor credibility have narrowed down the cash influx. Investors are pulling out their funds from the market. The swelling CAD resulted triggered sharp rise in demands for dollar, euro and pound. Out of these, dollar is getting strengthened as the US is making all-out effort to check the flow of its currency into the developing countries. In addition to this, the US economy is improving that has again started gravitating foreign investors.

The main cause of declining keenness of foreign investors in India is the failure of the UPA government in taking bold and concrete approach on economic reform front. In fact, several infrastructure projects hanged-fire owing to hitches in environmental clearances. Behind these environmental objections are the proactive roles of those social activists who are associated with Sonia Gandhi-led National Advisory Council. In this situation, foreign investors felt that whatever efforts being made by the government would not suffice to make the Indian economy reliable. India has strived hard to project itself as a major destination for investment to attract more numbers of foreign investors but no avail.The government made its FDI norms flexible so that investors can pump in or pull out their money from Indian market as per their convenience. Consequently, the share market continues to fluctuate, leaving industry-trade world high and dry. Some political leaders are of the view that choppy share market should not be linked with economy as the listed companies have little role in boosting economic condition, but it’s impossible to insulate rupee from the fallout of outflux of foreign currency from the market. The depreciation of rupee will have severe repercussion on the prices of petroleum products that will hike the costs of all commodities.

Some economists see silver lining in the dark cloud of declining rupee. According to them, the depreciating rupee will boost export sector in coming days. They put the example of China, which willingly kept its currency undervalued for ramping up exports. India cannot benefit by taking the leaf out of China in this context because economic conditions of both the countries are quite different. It seems difficult for India what China has done easily. For example, India is haltering dithering in taking decision regarding labour reforms as well as boosting infrastructure that could buttress industries for taking export to a new high.

Even after the Indian economy has crashed into disarray, our leaders posture as nothing serious has taken place. On the one hand many issues including economic challenges are eclipsing the prospect of India, on the other there is logjam in Parliament. Congress-led ruling dispensation at the Centre has solely prioratised Food Security Bill, while the entire opposition including the BJP is willing to disrupt the proceedings of Parliament. The last session of Parliament was not much productive and similar is the story with Monsoon Session as well. Several important legislations are biting dust amidst the fuss in Parliament.

The Central government has drummed up the goodies of Food Security Bill, but the fact remains that it is no less than a ‘Poll Express’ which has chugged off to electoral gains only. Congress as well as the government wants to consolidate its vote bank in the name of food security. The functionality of Food Security Bill, about which the government is blowing its own trumpet, hinges on existing Public Distribution System (PDS). In fact, the Food Bill is mere an extension of PDS. At present, around Rs 90, 000 crore is being spent on PDS. After the implementation of Food Security Bill, it will increase to Rs 1.25 lakh crore which will certainly aggravate the poor economy. Under the garb of food security scheme, Congress has delivered such a poll punch that has left opposition including BJP gasping. If the bill fails to get Parliamentary approval, the Congress leaders will publicise that the opposition has stonewalled the welfare scheme meant for poor and downtrodden people. And if the bill is implemented, a large chunk of the population could vote in favour of Congress. It would be pertinent to know that food security scheme will bring more pain than comfort as higher subsidy bill dent the government exchequer badly, which will exacerbate the Current Account Deficit. It would have been better had the government plugged the leakage of PDS that could have benefited the poor and there would not have been the requirement of food security scheme.

The gesture of the ruling party and the Opposition vividly indicates that they have pulled up their socks for genral elections. However, Sonia Gandhi has ruled out the possibility of early elections, but going by economic slumpdown and sagging credibility of the government owing to scams and scandals, the only exit is general elections.

(An original copy of the article published in Hindi on August 25, 2013 translated by the English editorial. The author is the Group Editor of Dainik Jagran)