Dear Readers,
While the US-Iran-Israel war is quitely moving to the negotiation talks on ceasefire in Islamabad by today, we have witnessed dramatic turn around the financial markets and it has impacted much globally.
The escalating conflict involving Iran, Israel, the United States, and the Gulf nations has cast a shadow of anxiety over the energy security of countries worldwide.
As crude oil prices are much fluctuating a lot, India's foreign exchange reserves are being utilised at an alarming rate.
In such a critical juncture, the government must never resort to the shortcut of "printing money" to fund high-expenditure schemes—such as the monthly ₹3,000 stipend for women—which have been announced as election promises by various political parties.
Economic experts warn that such a move would plunge the nation into an abyss from which recovery would be impossible.
According to fundamental economic principles, if the circulation of money increases in the market without a corresponding rise in the production of goods, it inevitably triggers "hyperinflation."
When people possess excess cash, they compete fiercely to purchase essential commodities; however, due to wartime-induced shortages, the supply of goods remains scarce.
Consequently, there is a grave risk that the price of a single liter of milk or a kilogram of rice could skyrocket to several thousand rupees. Eventually, the currency would lose all intrinsic value, becoming mere paper, and people would face the tragic plight of losing their entire life savings overnight.
This would also mark the beginning of the erosion of India's credibility on the global stage. If a nation unilaterally begins printing currency, the value of its currency in the international market will plummet to rock bottom.
Should the value of the Rupee collapse against the Dollar, the prices of imported goods—including pharmaceuticals, fuel and the electronic devices—would spiral out of control.
This would cripple the entire industrial sector, exacerbate unemployment and sow the seeds for social unrest as well.
The enduring struggles of nations like Zimbabwe and Venezuela, which remain unable to recover from the consequences of such misguided decisions would serve as a profound cautionary tale for us all. This triggers the increase in tax that levy by the Governments.
While printing money may appear to be a temporary solution, it is an act that effectively mortgages the nation's future.
Therefore, only by upholding fiscal discipline and preserving the value of the Rupee can India navigate and emerge from this wartime economic crisis.
The mere print of money would not the need of this hour.
Secondly, the unnecessary government expenditures and with the subsidy distribution will be cut.
By using the Direct Benefit Transfer (DBT) mechanisms would definitely bypass the intermediaries and reach the exact beneficiaries .
Third, capital can be raised through the disinvestment or sale of shares of loss-making Public Sector Undertakings (PSUs).
The substantial proceeds generated from such measures can be channeled into defense and social welfare programs during these critical times.
Finally, raising debt from investors by issuing long-term government securities (Sovereign Bonds) constitutes a fiscally sound approach. By accurately projecting India's economic stability, the government can secure funding from global investors at competitive, low interest rates. So, it reiterated that rather than going with the short term adjustments, we need for a long term drive to manage and for a wholesome development.
A nation's economic stability does not only reside in the printed paper; rather, but it also lies on that country's productive capacity and transparent financial management.
