No More Devaluation

No More Devaluation?
IT was quite a faux pas that the Congress MP from Chandrapur in Maharashtra, who had been as much taken by surprise as his party colleagues when the ministership of state for finance landed in his lap at the swearing in of P V Narasimha Rao's council of ministers, committed at the beginning of this month. Shantaram Potdukhe had confided to newspersons that one more round of devaluation of the rupee could not be ruled out if the balance of payments position failed to show any improvement. The economic policy establishment in the government was aghast. How could a member of the council of ministers so casually admit to the possibility of devaluation? What would happen to international confidence in the rupee? And think of the consequences for capital flight from the country, to stem which had been one of the professed objectives of the 20 per cent 'downward adjustment' of the value of the rupee in July. So the Reserve Bank of India was persuaded to issue the very next day a statement very firmly denying, on its own behalf and that of the government, that devaluation was even remotely under the government's consideration. The Congress MP from Chandrapur, it is to be presumed, had learnt his lesson in ministerial discretion.