It was indeed the weakest week, as far as our markets are concerned, with the rupee nose-diving to a record low against the dollar. European tensions, weak economic data, falling currencies, FIIs pulling out money, all this increased the speed of the market fall last week with Nifty moving past 4800 which was considered a major support level. Over regulation and vigilantism will bring some order in the system but will reduce the investment attraction of our country. This is evident from the kind of fund pull out seen after the Union budget, and this is one of the reasons, which pulled down our currency against the dollar. Widening current account deficit has remained a worry for some time now and this is another reason for the fall in currency. Subsidies are eating up a major part of our revenue and the government choking investment avenues to shore up funds. Retrospective amendments regarding the implementation of GAAR have created fear and are still meant to cash the cow to the fullest, even though it has been postponed by a year.

Wrong
Authorities have now realised that they have gone wrong somewhere, and repeated interventions by the RBI failed to arrest the fall in our currency. Unless and until they take some bold steps to reduce the currency account deficit, the situation will remain weak. Bold steps include freeing up the price of diesel to check the unnecessary use of the fuel, so that the fuel price is determined by the market forces, which will reduce the import of oil which accounts for the country's major imports. Yes, we will have to face the brunt of rising food inflation and general rise in cost of living but in the medium to long term, we will see deficits coming down and people getting used to it. All of this should be coupled with governmental relaxation of norms that are now scaring away potential investors. If only investments come into the country, jobs will be created bringing money into the hands of the public, helping them to deal with situation of higher fuel and product price. In order to improve the current account situation, pushing exports is a good move and the government is likely to offer incentives on exports of items and reward exporters who diversify into new markets. Benefiting sectors include textiles, handloom, leather and carpets.