Katare wrote:Suraj, those rates are for dollar converted in to rupee accounts. If you keep the dollars a d want interest paid in dollars interest rates range <5%. For govt it wont be a big issue to raise 20billin in international markets at liber +100 bp. Long term interest rate in us are still pretty low.
But we dont need any of that, what we needed was an end to 10 years of over valued rupee. This over valuation was the problem in 1991 and it was solved by devaluing the rupee. The devaluation is the over due correction for CAD. in few months we'll see imports slowing and domestic products becoming more competitive. As you know very well, in long term it always balances out. It has happened for 60 years and will continue until we get our acts togather and finish the reform process that was started fin RG's time.
Katare ji, what will domestic products become more competitive against. A lot of Indian Industry is today only a niche business. The bulk industry that provide employment and carry the same significance that 1s an 2s carry in the slog overs are mostly absent. We cannot slow down the imports because we import good things. We cannot export because we are not producing what is exported by countries that are in our kind of growth stage.
And in the long term people will be forced yet again to adjust to the will of their rulers. RG was 30 years back and what was supposed to be the solution at that time (devaluation) is still the solution today. That is a difficult logic to digest.
