By mixing emotions and business, India will only lose any edge it has.
Where exactly is he mixing emotions and business? This is some lame & inaccurate opposition argument.
Not supporting your adversary is strategic not emotions. Same rationale for India to reject China's belt and road within India which has been a global flop unless India joined which it fortunately never did.
Having a common currency will mean that the currency is stable and will naturally mean that currency has a higher exchange value wrt the usd.
This is not true. An absolute no to any financial integration that you are proposing. A common currency for BRICS was never on the books to start with. It is just for internal trading meaning it would not have any exchange value with countries outside BRICS. So the following comparison he makes below is not valid.
Let's suppose all the BRICS countries call India's bluff and make a common currency without India. Lets suppose the exchange value of that currency is 50 vs 1 dollar. Now Imports will become cheaper to all BRICS nations who accept that currency. Indian rupee is close to 90 now. That means a loss of almost 40 to both govt and exporters. So these smart people are throwing the baby with the bath water for some short term gains. After a few years they will change their stance on it when they see other countries have become richer and have more bargaining power and have better trade deals with West compared to India.I mean look at it from the other buyer's side too. Will you choose to trade with a group of countries having a single currency and you can calculate your profit/loss for 1 currency vs a bunch of currencies? Already EU is a group of countries having Euro. Look at the bargaining power the EU has.
None of the above applies for an internally traded currency. That is the flaw here.
Not a single country in BRICS has a globally traded currency and MORE IMPORTANTLY NONE are in any hurry to have one because then they would lose the ability to manipulate the exchange rate. And perhaps more importantly defend their currency from foreign predatory currency short sellers. Think Malaysia and SE Asia crisis in the late 90s.
Not so with Europe where DM, French francs, pound Sterling were globally traded.
But this is the exactly what his complaint is about. He doesn't want individual countries to be able to set an exchange rate according to their particular economic needs. Because he sees India's exchange rate dropping.
No reason why BRICS cant have a common brics currency. This is India shooting itself in the foot with a cannon. Should be dumb as bricks to mix emotion with business.
BRICS should go ahead with the common currency and throw India out imo. Don't let India in even if India wants to after the common currency is made. Unfortunately we are both a founding member and stupid at the same time.
This is just a rant because over time the rupee has lost value to the dollar. He thinks it would be more stable if some common currency circulated instead. In other words India would dilute if not entirely lose its present financial sovereignity in favour of a larger collective. Never going to happen.
The ability to set the exchange rate oneself is a massive advantage in cushioning against adverse economic conditions and more importantly paves the way to recovery as you control the rate for your benefit rather than some shared one. This is how this government had managed to recover and consistently grow from the wreck of an economy left by UPA 2.
Iceland was bankrupt after the 2007 financial crisis. Five years later they were solvent again. How? They have their own currency. They don't use the euro. Unlike Greece which has an economy that has to bear interest and exchange rates set by the ECB which are not suitable to the economic conditions of Greece. So Greece's economy remains down and is a basket case. And that is the reason for Greece to remain in the euro. They would not survive without it.
India has survived & grown ON ITS OWN since independence.
This is India's brexit moment before it even started.
This is another ignorant comparison. The pound exited the Euro exchange mechanism (ERM) back in 1990 having tried for a month and then bailed never to return. A very fortituous development for the British economy because the pound exchange rate gets set in London and not Brussels. YOU NEVER WANT TO LOSE THE ABILITY TO SET YOUR OWN EXCHANGE RATE.
Brexit occurs when? Over twenty five years later and has nothing to do with currency since the UK never adopted the Euro. Brexit was for political sovereignity.
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