With the rupee having hit an all time low of 60.76 against the dollar this week, the crisis in the management of the economy not only continues but has worsened. The rupee, which has been in a freefall for some time, has weakened more than 11 per cent since the beginning of May and it is even predicted that it may plunge to 62 in the near future. The fall of the rupee is likely to have a cascading effect on the whole of the economy as imports are likely to become costlier and as the import of petroleum products becomes dearer. Prices of commodities, already high, are likely to rise even further, which will further affect the common man, who is already overburdened. Besides the rise in prices of almost all essential commodities that has been steadily taking place, the hike in prices of LPG, kerosene and petrol that have persistently been taking place has added to their woes. The rise in prices will particularly affect the below the poverty line people, whom the government’s various poverty alleviation programmes, fraught with leakages and corruption, have hardly brought any relief. The Congress-led UPA government cannot escape its responsibility for its failure to arrest the slide of the rupee. It is not just mismanagement by the government but also the huge amounts of corruption generated by it that has led to the collapsing rupee.
With the year 2012-2013 having already seen the slowest growth in a decade, and the gross domestic product rising only 5.0 per cent in the fiscal year ended 31 March there is no relief for the common man. The UPA government interventions have been wholly inadequate in dealing with the persistent problems that have slowed growth and led to high inflation and burgeoning fiscal and current account deficits. Not just the inflation but high interest rates and a persistent policy paralysis have set India back. It is most disturbing that the economy is becoming increasingly vulnerable to external factors amidst concerns about economy’s ability to honour its external payments obligations. The economy is clearly sick and the macro-economic indicators suggest that it would be mistake to underestimate the severity of the economic problems confronting the nation. With a coalition government in a minority, weakened by a series of high profile corruption cases, there is little likelihood of a fast economic turnaround.