CEA Nageswaran asks India Inc not to seek protective cover of weak currency

Chief Economic Advisor advises India Inc to focus on productivity, R&D, and quality over reliance on weak currency for exports.

Chief Economic Advisor V Anantha Nageswaran on Thursday (November 22, 2024) advised India Inc not to seek protective cover of weak currency as it is not a substitute for productivity and investment in research and development.

A weak currency can be good for exporters, making their products relatively less expensive for buyers abroad.

Mr. Nageswaran further said the reliance on weak currency should not be instrumental to boosting exports, "if anything, it should be part of the policy arsenal to be deployed contextually, but not as a substitute for productivity, investment in R&D and quality, but as a complement at best".

"We should not be thinking about in terms of the transformation of competitiveness, which is to continuously expect the weak currency to bail us," he said at an event organised by the Institute for Studies in Industrial Development (ISID).

Noting that China relied on weaker currency but it was guided by domestic productivity leaps in the first decade and also in the last decade of the new millennium.

"In many other developing countries, including India, weak exchange rate actually has become a protective cover for lack of productivity.

"It was used to hide our inefficiencies. That should not be the case," Nageswaran said.