Blaming others weakens sovereignty.

When our diplomat in New York, Devyani Khobragade was sexually molested by New York Police there was outrage in India at this assault on our sovereignty. Justifiably so. But when our economy goes into free-fall our government blames ' outside forces '. Why? In these days of globalisation our economy will surely be affected by what happens in Europe, the US or China but as a sovereign nation we should be the sole guardian of our money and enact policies which make us richer, even if these have deleterious effect on other countries. Exactly what the Federal Reserve in the US is doing. The Fed has been stimulating the US economy by keeping interest rates at near 0% and releasing $85 billion dollars every month by buying bonds. A part of this money came to India looking for higher returns making the rupee stronger and loans cheaper for us. Companies went on a borrowing spree, increasing capacity without hedging against a fall in the value of the rupee, and property prices grew exponentially. In 2000 agricultural labor amounted to 238 million which dropped to 231 million in 2012. As tax collections increased the Congress resorted to huge handouts to please its ' vote bank ', to win elections. Inflation and fiscal deficit went out of control. Current Account Deficit reached 4.8% of GDP and could be controlled only by severely restricting import of gold. Last year the rupee fell to 69 to the dollar when the Fed hinted at reducing, or tapering, its bond buying program. This should never have been allowed to happen. When the rupee was appreciating the Reserve Bank should have been buying dollars, building up a large foreign currency reserve and keeping the rupee between 45 and 50 to the dollar to discourage imports. Economists Barry Eichengreen and Poonam Gupta say," Emerging markets that allowed the largest appreciation of their real exchange rates and the largest increase in their current account deficits in the prior period of quantitative easing saw the sharpest currency depreciation, reserve losses and stock market declines when talk turned to tapering." However, while their attention has been fixed on the dollar the Chinese central bank pushed the Yuan down to deter speculators who have been buying the Yuan on borrowed money. If the Yuan falls suddenly what happens to the rupee? A strong nation would never allow others to dictate its economy.