The Performance of the Indian Rupee under Narendra Modi: Debunking Myths and Clarifying the Reality
When discussing the performance of the Indian Rupee (INR) under Prime Minister Narendra Modi's government, it is essential to separate fact from myth. Often, the question arises as to why the inflation rate has not been reduced during his tenure. Delving into the economic context and understanding the global economic landscape can help clarify the issues surrounding the Indian Rupee.
Why Hasnt Mr. Prime Minister Modis Government Brought Down the Rate of Inflation of the Indian Rupee?
It is often argued that the Indian government, under Prime Minister Narendra Modi, hasn't managed to effectively control the rate of inflation. However, the situation is more nuanced. While it is true that the inflation rate experienced a slight dip in 2014 and 2015, this was not due to the government's proactive measures but rather was influenced by factors unrelated to policy control.
The inflation rate peaked at 11.16% in 2013. However, leaving aside the prices of certain essential commodities whose crops were devastated by natural calamities, the overall rate experienced a significant reduction. The inflation rate actually decreased to around 5.3% by 2015, marking one of the lowest rates in the recent past. This indicates that there has been some level of control over inflation during Modi's rule. Therefore, attributing the entire situation to the government's lack of control is overly simplistic.
The Role of Natural Calamities and Commodity Prices
It's important to note that the stability in prices of selected commodities is often a result of external factors such as natural calamities. For instance, the prices of agricultural goods may fluctuate due to factors such as droughts or floods, which can affect the overall inflation rate. While these events can cause a temporary increase in prices, the government's economic policies have played a role in stabilizing the overall rate of inflation.
The Global Economic Context
Narratives that blame the Indian government for the fluctuation in currency rates need to be critically evaluated within the broader global economic context. The performance of the Indian Rupee, much like any other national currency, cannot be viewed in isolation. The global economic environment, including fluctuations in other currencies, significantly impacts the INR.
For instance, while it is true that the USD has been performing exceptionally well due to the robust performance of the US economy, it should be noted that many other currencies have also been performing poorly. The Russian Ruble, for example, saw a significant depreciation in recent years. Many currencies are facing a similar trend as the US dollar benefits from its position as the world's reserve currency.
Therefore, a comparison of the Indian Rupee only with the US Dollar might be skewed. The US dollar's dominance in the global trade system means that even if the INR is stable, its performance can appear worse in this context. The Indian Rupee has indeed performed well against most other world currencies, but this is relative to the superior performance of the US dollar.
The Critiques and Clarification
Myths regarding the Indian Rupee's poor performance are often fueled by a narrow focus on specific comparisons that favor the US dollar. It is accurate to state that the Indian Rupee has not depreciated in the absolute sense. The apparent performance of the INR is more about the exceptional rise of the US dollar due to strong economic conditions. In reality, the Indian economy is continuing to perform strongly despite these global economic challenges.
The Indian Rupee's stronger performance against other currencies can be attributed to several factors, including the robust economic policies of the government under Narendra Modi. While the government cannot control the international economic environment and currency valuations, its policies have helped to stabilize the domestic economy and inflation rates.
Conclusion
The performance of the Indian Rupee under Narendra Modi is a complex issue influenced by a multitude of global and domestic factors. While inflation has seen some reduction, it is important to consider the role of external economic forces. The Indian government's policies have contributed positively to the economy, and the rupee's performance should be evaluated in a broader context of global economic trends and policies.
Further Reading Resources
For more detailed analysis and data on the Indian Rupee's performance under the Modi government, refer to the following resources:
IMF Reports on Indian Economy Economic and Political Weekly Articles on Indian Rupee Reserve Bank of India Reports on Exchange RatesUnderstanding these factors can provide a more comprehensive view of the Indian Rupee's performance during the Modi regime.