The Indian budget of 1991-92, though lauded by many, does not take complete advantage of the vast opportunities for fast growth. Since its presentation, the appreciation in the real as well as nominal value of the rupee has been taking place; the appreciation would eventually bring down the export growth rate- the main source of enhanced growth- to less than 6 per cent for 1996–97. Unless the Government and the RBI correct this by changing the value of the rupee, growth rate of the economy would continue to slow down. If a sharp depreciation of the rupee is brought about, the economy can grow at rates in excess of 9 per cent, and this growth would be sustainable. The current focus of the government and the RBI on capital account convertibility at the cost of export growth implies a one way ticket to a dysfunctional and irreversible maturity of the economy. India has a surfeit of skills and demonstrated ability to respond to price and market incentives to produce for exports. There is little reason to not use disequilibrium exchange rates (as used by many other Asian countries) to enhance its exports, hence expenditure, and so growth. That the state has not pursued growth maximizing policies via exports growth is due to the limitations that the rentier classes impose, and to its adherence to monetarist ideology. In addition to reversing the appreciation of the rupee, the policy makers need to direct their attention towards encouraging expansionary monetary policy, stimulating demand, and increasing supply of credit to small firms. A comprehensive growth of the small firms sector through credit expansion and currency depreciation, would not only expand exports, but generate additional employment and moreover, reduce poverty.  

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