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Bop India
Essay specific features
Written by:
Richard A
Date added:
August 22, 2013
Level:
University
Grade:
No of pages / words:
3 / 817
Was viewed:
1781 times
Rating of current essay:
Essay content:
Prices determined by competitive trading are very sensitive to interest-rate differences. In India (and Pakistan etc) genuine capital account transactions have not existed since the 1930s, and do so only in highly distorted form even today. The traditional export surplus and positive current account, balanced by net inflow of precious metals, had been wiped out and current account deficits were coupled with overvalued currencies and closed capital markets - along with repressive financial policies causing capital flight of an elite nomenklatura...
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The inherent risk of unproductive use of funds by borrowers and consumers of forex (mostly Government) were shifted to export and other hard-currency earning sectors.
In particular, a severe trade-deficit had followed petroleum-price rises in the late 1970s, which continues today. There has been some exploration, discovery and extraction of domestic supplies of oil and gas, but no significant move to conserve or find economical alternatives to use of imported energy...
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