Touria Prayag's Blog

l’Express Weekly, 24 September 2010

Posted in Uncategorized by touriaprayag on September 24, 2010

Editorial   Click here to read l’Express Weekly

Paving the way

The minister of Finance has not won the war
yet. The union leaders he met with on Tuesday
remain cautious: “the proof of the pudding is
in the eating,” as Rashid Imrith states in the
interview given to l’express Weekly today. However, the
new minister has secured many battles and has managed
to wriggle his way out of trouble, fending off lobbies.
The fi rst lobby which raised its head was that of exporters
asking for the devaluation of the rupee. Advancing the justifi cation
of the weakening of the euro, they started painting a picture
of doom and gloom. The hotels and the sugar estates offered
a pas de deux (or trois) to the textile operators, dancing to the
same tune. Of course, everyone knows that devaluation is not the
remedy. Unless there are serious fundamental macroeconomic
imbalances which dictate devaluation as a last desperate resort, it
is not opted for as countries do not gain, in the long run, by way
of devaluation of currencies. Rupee devaluation is tantamount
to a transfer of wealth from the larger community of defenceless
savers, wage earners, pensioners and taxpayers, to a handful of
business owners. It is effectively an insidiously and perniciously
impoverishing tax on the public at large. The permanent benefi ts
of currency devaluation accrue only to a handful of exporters
to the detriment of the masses. Even then, the expected gain is
neutralised by a reduction in the prices of export goods and/or
by the rise in prices of inputs used in such goods.
It is also interesting to note that when the rupee was, for years,
very low and we felt like paupers every time we left the country,
we did not hear a whimper from the exporters! You will have also
noticed that the importers have been crouching in their funk holes
for a while. Lying low, their euphoria must be tremendous but it did
not trickle down to the consumers. The prices have not gone down
one little bit as a result of our supposedly high currency, just the
opposite, and nobody is asking them for an explanation. Not even
the associations which are paid to defend the consumers!
Of course, Pravind Jugnauth does not say this to the lobbies.
He does not tell them that devaluation, in fact, causes infl ation
to surge beyond control and chokes productivity growth. He
doesn’t need to. With unexpected tact, he sends them to the governor
of the Bank of Mauritius, who, he claims, works independently
of him. Touché! They move away and now the governor of
the Bank has to deal with this disgruntled lot next week.
Another battle has been won with the union leaders in the
pre-budgetary discussions. They handed in their shopping list
with the usual no-half-measure requests to the minister who
made no concrete promises other than the fact that their proposals
“will be the object of an analysis”. However, he sent the
normally sulky unions into ecstasy and they came out of his offi ce
charmed. They were unanimous: they met a different Pravind
Jugnauth. One who listens and keeps his cool. One who smiles
through adversity. One who shares a cup of tea with them. In
other words, they met another Navin Ramgoolam!
Navin Ramgoolam’s popularity is based primarily on such aspects
as body language, the right word, the calm demeanour, the
disarming smile and the shared cup of tea which make everyone
feel they are so special. The kid is learning fast and paving the way!


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