FDI panacea ''The govt can take steps to attract dollar inflows.

'' The Indian economy has not been in the pink of health for some time now. The eco nomic growth rate has showed down, general inflationary trend has assumed alarmi ng proportions, the stock market is in a prolonged phase of downturn, foreign in vestment flows have hit a low, the countrys the oil import bill has been shooting up and, worse, government finances are in poor condition. The common man is paying a heavy price as the rupees purchasing power has fallen in the face of high rate of general and food inflation. To avert a deeper crisis , the one thing that should not be happening at all in these circumstances is th e currency exchange rate erosion vis-a-vis the US dollar. That, however, is not th e case in reality. The rupee has suffered almost 15 per cent devaluation in doll ar terms over the past few months, half of which has happened in recent weeks an d days. We are told that the rupees unprecedented fall is a result of the raging financia l crisis over the Eurozone that has allowed the euro to lose value against the d ollar. Why should the Eurozone crisis hit India so badly? And, among the currenc ies of leading developing economies, it is only the rupee that is experiencing s evere exchange rate erosion. One might be tempted to ask if deeper integration w ith the Western economies is sucking the Indian economy into the myriad problems they currently face. This may not necessarily be the case. Almost all currencies of the developing wo rld have maintained their ground the Chinese Yuan has actually become stronger a gainst the dollar in recent weeks. Union finance minister Pranab Mukherjee and RBI governor D Subbarao have suggest ed that their ability to intervene by releasing the dollar to meet demand is lim ited the RBI doesnt hold dollars in huge amounts. But the government can take ste ps to attract dollar inflows in the form of foreign direct investment. Nothing c oncrete has been done in recent months in this regard. Some big-time foreign investment-generating market reforms have been in the pipe line for quite some time, but they are yet to arrive, as the Manmohan Singh gove rnment is preoccupied with political battles on the home front. The only investm ents that have come and gone -- were in the stock market. In the last few weeks, foreign investors have withdrawn almost half-a-billion dollars from the stock m arket. The government may not have many options other than considering taking qu ick decisions to attract foreign investments afresh to stabilise the rupee.