There is no
justification for the fall in value of rupee against the
Dollar because of the Kargil situation feels Dr.
J.D.Agarwal, an eminent economist and Director, Indian
Institute of Finance
The panic buying
of the Dollar by the corporates for their import requirements
is not appropriate as India has fairly sufficient foreign
exchange reserves.It seems that the war may not break
out or in case it is breaks out it may not last for more
than three to four weeks because International opinion
is in favour of India and no right thinking leadership
will justify the intervention of one country in another
country as the case is in Kargil, opinion Dr. Agarwal
. Moreover, he feels as India is able to flusjout the
militants from it's territory in Kargil, close to the
line of control, the panic buying is unjustiable, Accroding
Dr. Agarwal the Kargil affair might help India bring and
end to the cold war imposed on India by Pakistan for a
long time ..The Fincial fundamentals of India's economoy
are significantly strong and actually much stronger than
Pakistan who is at the brink of economic bankruptcy.
In case a war
breaks out and it is not supported adequately by economic
strength of the country, such country may not be able
to sustain the war for a long time .Eversince the economic
sanctions have been imposed and the Pakistan has dwindling
foreign exchange reserves of a mere 300 million Dollars
as on 31st March ,1998 and other economic crisis faced
by Pakistan it would be difficult for Pakistan in the
wake of it's own economic situation to sustain war
Dr. Agarwal
strongly feels that RBI should intervene directly or indirectly
in the forex market ty maintain the value of the Rupee
at the stable rate to void any wrong singals in the International
Market. The depreciation of the Rupee due to speculative
pressure even of genuine demand may have adverse effects
on the foreex inflows adn Foreign direct Investment, reiterated
Dr. Agrawl.
Dr. Agarwal
feels that in case war breaks out, it will help in revival
of the Indian basic industries, reduce corruption and
evoke patriotism.
