In 1997, the Asian financial crisis was precipitated by a devaluation of Thailand's currency the baht. "India was spared the horror of the crisis, thanks to control on free movement of capital," wrote Shah and Angre. Since then Asian countries have built up huge foreign exchange reserves to shield their currencies in the event of a sudden sellout by investors. The growth of the Bombay Stock Exchange has been second only to that of Indonesia. The second storm to hit Asia was the subprime crisis of 2008. Again India was relatively spared. However, Asia still remains vulnerable to external shocks, wrote W Pesek. "Yet Asia is still too reliant on exports for growth, too vulnerable to US Federal Reserve tightening, too defenceless to rising oil prices and too exposed to exogenous shocks like Trump's tariffs." If India was spared in both the crises because of our paltry exports, why did the CEO of Niti Aayog, the government think tank which replaced the Planning Commission, A Kant write "Export or perish"? "India's economy cannot survive without exports. In 2017-18, exports of goods and services contributed about 12% of India's GDP. In contrast, exports made up over 42% of South Korea's GDP." South Korean President Moon Jae-in visited India recently in an attempt to boost trade ties between the two nations. "There isn't much room to expand Seoul's already well-developed relations with China, Japan and the US," wrote B Chellaney. "Moon is targeting economies with the greatest growth potential: several Asean economies and India are projected to grow at annual rates more than double that of South Korea in the coming years." "The fact is that South Korea went from poverty to wealth in almost one generation." "South Korea has a high trade-to-GDP ratio, a good indicator of how vulnerable any country is to the dips and dives of the global economy." That probably is the problem. Just as South Korea sees a huge market of 1.3 billion people Indian companies see no reason to fight for exports when they have a huge market right here at home. But faced with foreign competition Indian manufacturing has fallen from 16.41% of GDP in 1989-90 to 16.2% in 2015-16, which leads to a merchandise trade deficit of 8-9% of GDP, wrote A Ranade. Non-oil, non-gold imports are causing a huge rise in our trade deficits, wrote M Chakravarty. Indians are buying electronic imports from abroad because they are cheaper and affordable. Since our companies are not spending on research Indians resort to 'jugaad' to solve local problems. "India's oldest hack may be its biggest obstacle on the road to world power," wrote D Nelson. Kant may want to increase exports but first we have to produce what people want. That needs quality. Not jugaad.
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