...........In other words, the government should let the rupee depreciate. A falling rupee is not a hit to national pride - it is merely a basic economic consequence of India's struggle to pay properly for its gold and fuel imports, and the invisible hand's way of counteracting that demand. It is precisely because the rupee is falling that the danger of a serious balance-of-payments crisis is not even more acute than it already is. The trouble is that some companies that have considerable external exposure will find themselves unable to cover their dollar debt. Again, given the nature of India's political economy, there will be pressure on the government to somehow bail those companies out..............
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