Tuesday, May 12, 2009

Depreciating Our Way to Chaos


Rajesh Jeetah once said that the textile industry was not a place for whiners. I couldn't agree more with him especially when you realise that our rupee has systematically been depreciated against the British pound over the last 24 years. That must have been a bonanza for the so-called export-oriented enterprises which saw the pound move from about Rs20 in 1985 to over Rs60 in 2007 as the above graphic shows.

What I don't understand is why some people from that group have been complaining non-stop for at least a decade about a strong rupee and their lungs seem to get larger by the day. What would they have said if they were operating from Singapore where the local dollar has pretty much appreciated against the USD? How would they have behaved if their operations were based in Canada which unlike us don't stigmatise their workers as lazy bones before allowing into the country foreign workers that will work for the smallest possible pay and endure the harshest working conditions deprive their unluckiest citizens of a facade of dignity. Besides if the textile industry has been so bad, why the hell did they stay in there for so long?

The other interesting thing in the above graphic is that we clearly see the consolidation that the industry went through between 2001 and 2005. Bean-counters of course call that a shock.

13 comments:

Anonymous said...

And what has been the productivity trend and the wages trend during that same period?

Sanjay Jagatsingh said...

There is a limit to the number of widgets that a human can make in a given time. When you get close to that number it's way time to move upmarket unless of course you are stuck in the colonial model - http://kozelidir.blogspot.com/2008/08/stuck-in-colonial-model.html

We also need to find out how the margins that some of the textile companies earn compare with their peers across the world.

Anonymous said...

In order to do that we'll need to develop a transparent environment in term of statistics and information flow.

Cyber island doesn't limit itself to internet connections.

Only when information on real time economic activity is available, could there be real talk of budgets, monetary, fiscal policies and economic stimulus packages.

Also my point was that without knowing what is the real share of trade with the UK... what is the point of knowing the trend of the FX between the Rs and the Pound? No effective policy could be deduced just from that

Anonymous said...

Alors tantot nous pou attane " gateau piment rassis" dans programme MBC Dossier.

Anonymous said...

I see that Sanjay, and others also, are having the same reaction as Pravind Jugnauth. I.e blaming only Rama Sithanen. Its true he is the minister of Finance and c'est lui qui pilote la politique economique. But in our system, the Prime minister is most powerful, and no finance minister can impose, dictate and decide against the will of his boss. So please. Do not forget taht whatever policies which heve been chosen since July 2005 have been approved by Navin Ramgoolam and the Cabinet of ministers... Even the socialists vitrine like Miss Deerpalsing and oteher said Hossen sont partie prenante de ces mesures... tout le reste n'est que rhetorique...

Sanjay Jagatsingh said...

About showing the trend of the Rs/$ exchange rate: it is a kind of litmus test of the overall competitiveness (hence the title) and measures the credibility of those cry babies. The analysis can certainly be expanded to include industry dynamics.

About blaming only Sithanen: Ramgoolam has not been spared either if you browse the posts.

Anonymous said...

"No finance minister can impose, dictate and decide against the will of his boss", very true. What if the boss is ignorant and gullible?

Kranti said...

Thanks for this blog....

Sanjay Jagatsingh said...

I think our CSO is doing a good job and we can certainly do much better in terms of policies than what we are doing right now. For instance did we need to make the country go through summer time to find out that it's a useless policy? Do we need more and real time data to arrive at that conclusion?

Ramgoolam just wants to stay PM even if nothing is achieved while he is in office. Berenger is like that too.

You're welcome Kranti.

Sanjay Jagatsingh said...

A comparison between Vishnu and his zinku that you'll not get from the habitual idiots.

There is a flaw though: if we want to be export-oriented then we shouldn't aspire to become a high-income country. Guess Mr. Lallchand hasn't looked carefully at the exportweltmeister yet.

akagugo said...

Look a what Russia is being compelled to do: a "shock and awe" move, but in vain.
As in any pool, the ripples one creates will eventually hit its borders - I wonder what the magnitude of the ripple will be and when it will impact others economies depending on it...

Sanjay Jagatsingh said...

Mauritians don't want to work or won't work for poverty-level jobs?

Sanjay Jagatsingh said...

Commentators a lot smarter here.