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Thursday, May 1, 2014

Class V Girls Offer Help To RBI Governor To Save Country

When a class V girl offered to help RBI governor Raghuram Rajan--Times of India

NEW DELHI: One doesn't expect a fifth grade student to be worried about the state of the economy and the country's foreign exchange reserves, much less pen a letter to the Reserve Bank of India governor offering help. 

But last September, when the government and RBI were battling a major crisis with the rupee hitting record lows and the current account deficit going beyond acceptable levels, Laila Indira Alva, a class V student of Sanskriti School, wrote to central bank governor Raghuram Rajan

"I have heard about the crisis our economy is facing... I have also heard about the fall of the rupee with respect to the dollar," Alva said in the letter to Rajan, which has now been published in her school magazine. But unlike several others who complained about the curbs, such as those on importing gold, to check the deteriorating forex situation, the girl from Gurgaon went on to offer help. "I have saved $20 on my last trip abroad with my parents. I thought that I could use it but the country needs it more than I do," the letter dated September 5 said.


Rajan, who had just moved to Mumbai to take charge as RBI governor, wrote back to commend Alva's response although he refused to tap into her savings. "I am deeply touched by your kind gesture. I am aware that this is a challenging time for the country and I have no doubt that the economy will emerge stronger," the RBI chief assured the student. 

"I am returning the 20 not (note) that you had sent with the assurance that we have adequate foreign exchange reserves in RBI to manage the situation," Rajan wrote on September 12, when the foreign exchange reserves were hovering around the $275 billion mark. 

A weak rupee had then put the entire economy under strain as oil imports threatened to upset the government's fiscal arithmetic. The crisis of sorts prompted the government and RBI to announce a series of measures, ranging from restrictions on gold imports, overseas investment by companies and remittances by individuals. Separately, steps were initiated to attract more dollars into the country. 

With exports improving and imports contracting, a crisis has been avoided. Little Laila will probably be happy to know that forex reserves have now climbed to almost $310 billion and the rupee has recovered from a low of 68.83 to a dollar, closing at 60.31 on Wednesday. 

Link Times of India

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