As expected, govt. will finally make it to 100% FDI in telecom.
Whenever rupee falls, govt. go for either of the 2 options. It either increases fuel price or provide relaxation in FDI.
Talking about 1st option(fuel price rise) : About 43% of fuel price contributes to tax. Fuel price is riced because it draws money instantly into govt.’s hand. It is then used indirectly to power up rupee against dollar.
The 2nd pillar – FDI – was very effective few months back. Relaxation in FDI rule pumped in many FIIs’ investments. Few months back it accounted to 50% of total foreign investment in India. But weak govt policy has resulted in back out by many FIIs. And thus resulting drowning of rupee. At one moment, India seemed to be the only big market left. But ineffective govt. policy & tidy work by govt turned down these FIIs.
But both the method have not helped stabilizing rupee. And they can never help. Govt. will have to look after Indian forms. This will though take time but will let rupee gain power in future. Govt have to make sure that Indian firms makes contribution. Only a small fraction of all big firms holds by Indian firms.
With foreign money pouring in, our economy would be dependent on other & would thus be unstable. All the problems arising in western part would then be routed to India if we continue to support FIIs.
– Apurv Srivastav