Tuesday, August 7, 2007

Stronger Rupee = Stronger India

This article is really worth reading.
Let me ask a question first.

What type of economic strength is preferable to India?
A) A strong Indian economy fueled by its cheap labor due to a weaker
rupee against dollar, where the Indians end up working in shifts, late
nights, whole nights and what not* only doing low profile jobs which
foreign companies want to offload to India, so that they can concentrate
on high end works and become even better. For instance in IT field,
providing BPO services, support and maintenance work for products*


B) A strong Indian economy fueled by its strong innovations and
products, no matter whether the rupee is strong or weak against dollar..
where Indians work only in regular office hours of 9 to 6, developing
cutting edge technologies and solutions, selling our world class
products both inside and outside India. For instance in IT field,
imagine operating systems, compilers, databases etc all coming out of

I do not deny the fact that the IT boom in India came to a large extent
because of (A). Well and good, we have had the benefits of our cost
being cheap in western markets due to a weak rupee against dollar.. We
have had our share because of this advantage in the past 2 decades..

But at the same time doesn*t it make sense to move towards (B),
instead of crying foul against rupee becoming stronger against dollar?

What a pity! Indian IT companies are feeling bad (
)because rupee is becoming stronger against dollar!Reason, their profits
will go down when the value of rupee is stronger, as every single dollar
that comes into their account now means lesser rupee than earlier..(if
for instance earlier they used to get 47 rupees for every dollar that
comes in, but today its about 40!)

But isn*t this a matter of celebration? Our rupee is gaining
importance internationally and is becoming stronger again.. How many of
us know that in 1947 when India got independence 1 Rupee was 1.2 US

These Indian IT companies instead of relying on a weaker rupee for
their profit should now look at coming out with innovative products and
technical solutions. What have these companies done in the arena of core
system products? Why don*t we have any operating systems, compilers,
database systems, development platforms etc coming out of India? Why
don*t we develop tools like photoshop or flash? We have talent, but
they all are working in American companies on these products.. Cannot
our Indian IT companies setup at least small teams to develop such

Instead they are planning to make their employees work on saturdays too
! So that their profits can increase due to extra hours the employees
put in.. As if India doesnt have any other option other than cheap
labour, workaholic labor!! Are there no brains in India who can setup
companies developing products and make money just by printing out more
serial numbers and burning their product DVDs?

If Indian companies continue to depend on its weak currency, then how
would Indian economy survive in a world where all currencies have equal
value? Survival of the fittest.. Only greater innovation can help us in
that case..

We need to have knowledge and technological advantage if India wants to
become a superpower, not low cost based cheap labor advantage! Let the
Chinese do it..

I hope that rupee becomes more and more stronger so that Indians are
forced to use their brains and come up with innovative products and next
generation technologies, than to provide low end services*

We need to create a situation where other countries line up to buy our
F-16s, to buy our operating systems, to buy our mobile phones and
I-pods, to buy our Boeing, to buy our Mercedes*

A stronger rupee means we can easily afford foreign trips!

*A stronger rupee means Indians can buy things anywhere in the world
on par with developed economies! We dont have to spend crores of rupees
then to buy a Boeing! We don*t have to pay tens of thousands of rupees
for international air travels! A stronger rupee means greater
international exposure! There wont be a difference between buying a
Maruti and buying a Mercedes! One can go on a trip to the Grand Canyon
just like the way one goes to Ladakh or Nepal ! How do you think
american citizens are able to tour all over the world? Because they earn
more? No. But because their currency USD is stronger.. and this is where
a strong rupee will lead us to!**

I am not saying providing low end services is wrong .. It gave us a
very good start in the 90s. But that should definitely not be the bread
and butter fueling our economic boom indefinitely in the future.. For
the simple reason that it can*t continue to do so any longer.. other
low cost destinations, cheaper than India are already coming up in the
world* Let us move ahead* become more innovative.. the journey has just
started* This is just the beginning of all the beginnings*

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