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Tuesday, June 26, 2012

India's currency, the Rupee continues to devalue as Economic slump deepens

Blogman's Notes: As predicted here over the past 4 years, the Indian Economy, though huge because of a 1.2 billion population, could not possibly continue growth as over the past 15 years for a variety of reasons. I speculated frequently that the Economic boom in India, which benefited a minority of upper middle class and wealthy Indians, has actually been detrimental for the vast majority. A billion or so Indians have actually been hurt badly by globalization as their subsistence level wages have fallen further, leaving a half billion people in abject poverty with the largest malnourished population in the world, greater than in sub-Saharan Africa. The wage inequality, which was already huge in India has now grown to become a chasm. India'a growth that was primarily driven by foreign investment is now slowing down rapidly because of turmoil in foreign markets and this is being reflected in the devaluation of their currency, the Rupee. As the Rupee devalues, imports, especially of oil become more expensive, and that leads to more inflation in a nation that is being literally torn apart by high inflation. Unless India takes steps to stop globalization and once again become a self-sustaining Economy as it was till the mid 90's, the only thing that lies in their future is a revolution or civil war or intense sectarian violence, maybe even a war with Pakistan. Stay Tuned!
(Reuters) - Global private equity funds, which poured tens of billions of dollars into India investments when the economy and currency were flying high a few years ago, may be stuck with those holdings much longer than planned as the rupee's plunge plays havoc with their exit options.

Returns on funds raised in dollars have shrunk with the currency's tumble to record lows, compounding the effects of a weak stock market and slowing growth, and threatening to further dampen private equity interest in Asia's third-largest economy. Read More

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