{"id":53826,"date":"2019-11-07T17:28:07","date_gmt":"2019-11-07T11:58:07","guid":{"rendered":"https:\/\/blogadmin.forumias.com\/?page_id=53826"},"modified":"2019-11-07T17:28:17","modified_gmt":"2019-11-07T11:58:17","slug":"answered-how-would-the-recent-phenomena-of-protectionism-and-currency-manipulations-in-world-trade-affect-macroeconomic-stability-of-india","status":"publish","type":"page","link":"https:\/\/forumias.com\/blog\/answered-how-would-the-recent-phenomena-of-protectionism-and-currency-manipulations-in-world-trade-affect-macroeconomic-stability-of-india\/","title":{"rendered":"[Answered] How would the recent phenomena of protectionism and currency manipulations in world trade affect macroeconomic stability of India?"},"content":{"rendered":"\n
Demand of the question<\/strong>
Introduction. <\/strong>Contextual Introduction.
Body. <\/strong>Discuss the effects of these phenomena on the macroeconomic stability of India.
Conclusion. <\/strong>Way forward. <\/td><\/tr><\/tbody><\/table>\n\n\n\n

Protectionism refers to government actions and policies that restrict or restrain international trade. Currency manipulation refers to actions taken by governments to change the value of their currencies relative to other currencies. In 2018-19, the global economy witnessed a spurt in both of these phenomenons. Both protectionism as well as currency manipulations are considered as trade distortion practices and are counterproductive to global free trade. These not only have impact on global economy but also affect macroeconomic stability of individual economies.<\/p>\n\n\n\n

The effects of these phenomena on the\nmacroeconomic stability of India are:<\/strong><\/p>\n\n\n\n

  1. Inflation:<\/strong> Currency manipulation results\ninto costlier imports which limits the Consumers\u2019 choice and they end up paying\nmore for the limited quantity of goods and products, thus causing inflation.\nSimilarly, protectionism also limits the choices of consumers. Overall, global\ncompetition is a key factor in keeping the price of numerous goods and products\ndown and gives consumers the ability to spend.<\/li>
  2. Economic growth: <\/strong>Protectionism leads to\nincreased import costs as manufacturers and producers have to pay more for\nequipment, commodities, and intermediate products from foreign markets. This\nwill lead to decrease in real GDP.<\/li>
  3. Employment:<\/strong> Protectionism is not only\nabout restricting the flow of goods and services, but also the skilled human\nresource. Any restrictions on this will not only promote unemployment but will\nalso hamper the growth.<\/li>
  4. Impact on Industries:<\/strong> Protectionism may\npromote inefficiencies by the infant industry as it will have no incentive to\nmake itself efficient through use of technology and long-term investments.<\/li>
  5. Impact on Exports:<\/strong> In the successive\nmonetary policies in 2018-19, RBI has observed that protectionism poses\nchallenge to India\u2019s growth rate, because it affects the demand of Indian\nexports, especially in the textile, pharmaceutical, gems-jewellery and service\nsector. It has also affected the employment generation capacity of the sectors.<\/li>
  6. Current Account Deficit:<\/strong> In the absence\nof robust export base, the intermediate goods that form part of the global\nsupply chain becomes more expensive because of protectionism, leading to\nwidening CAD. Higher CAD further puts the rupee under pressure and raises the\ncost of overseas borrowing.<\/li><\/ol>\n\n\n\n

    Since, protectionism and currency manipulations do not seem to halt in coming future, it is necessary for India to walk through these murky waters carefully. Indian policy makers need to be innovative and flexible in responding to the current uncertainties of the global world.<\/p>\n","protected":false},"excerpt":{"rendered":"

    Demand of the question Introduction. Contextual Introduction. Body. Discuss the effects of these phenomena on the macroeconomic stability of India. Conclusion. Way forward. Protectionism refers to government actions and policies that restrict or restrain international trade. Currency manipulation refers to actions taken by governments to change the value of their currencies relative to other currencies.… Continue reading [Answered] How would the recent phenomena of protectionism and currency manipulations in world trade affect macroeconomic stability of India?<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":2292,"parent":0,"menu_order":0,"comment_status":"open","ping_status":"closed","template":"","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-53826","page","type-page","status-publish","has-post-thumbnail","hentry","entry"],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/53826","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=53826"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/53826\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/2292"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=53826"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}