Reduce Trade-Deficit to Increase Jobs...

Policy makers often give stress to job creation and lower unemployment with decent wages to claim that growth has been fruitful to justify the long-run course of expansion in the people’s living standard for which jobs are very important. Jobs are the best insurance against poverty, moreover it also generates demand and supply and growth with price-stability at full-employment. Full-employment gives the highest demand and supply to maximize growth while maintaining financial stability, niether inflation nor deflation, the same prices-stability in a sense… Both, the domestic and the external sector of the economy decides the level of employment or full employment in the economy, countries also object trade deficit due to less jobs in the domestic economy… Like the continuous spar between the US and China… INDIA has traditionally relied on the domestic demand to achieve growth; however it is a major exporter of cereals, but fewer jobs in the manufacturing and exports which demand skilled labour force… Skills are very crucial to create employment oppourtunities in manufacturing, economists and analysts many times have underscored low manufacturing and skills base as impediments to job creation. INDIA’s trade-deficit also point to less quality or skilled jobs in the economy…

Lower wages in INDIA provide it a competitive advantage in trade... It is unwise to import articles which INDIA could produce at lower prices also because jobs are important... Economists favour international trade because it increases real wages and not decrease it... Lower domestic prices would also increase domestic real wages by lowering the domestic price level and would also increase exports by lowering the same and imports could increase too, since real wages would increase... INDIA should go for internal devaluation to increase demand, domestic, imports and exports, and growth, local and global... Lower borrowing cost would also make the exports competitive or help lower prices and increase demand...

The INDIAn rupee has appreciated in the past… A strong rupee would lower domestic inflation since imports would be cheap... Domestic inflation would go down... INDIA is a net importer therefore strong inflows and strong rupee are likely to help reduce demand for foreign reserves and inflation and depreciation... However, cheap imports, lower domestic inflation could also increase demand for exports... It increases demand through internal devaluation because domestic price level might go down too due to cheap imports... Cheap imports could also make the domestic economy competitive in terms of low inflation and wage demand...