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Friday, April 4, 2008

Spending Forex on higher education


Our students going abroad for higher studies involve the loss of valuable foreign exchange. How could a poor country like ours afford to lose its vital assets for purposes like educating the children of rich families?” All the students in the audience had been highly taken by this declaration, because at the university, there is normally an anti-foreign degree feeling. What the academic said was, therefore, sweet music to their ears.In fact, what they wanted was my endorsement of this view.
When I asked them whether they also hold this view, all of them answered with a single ‘yes’.

“Why do you say so?” I asked them. One student summarized the general opinion on the issue. “The future of our country depends on our having enough foreign exchange resources. We earn them with much hardship. Our exporters work hard. Our expatriate workers work hard. So, what’s been earned in the hard way should be protected. We shouldn’t permit anyone to squander these valuable national assets.”

I said, adding: “But, remember whoever who has sold that forex to a bank has already been paid in rupees. It doesn’t matter whether it’s an exporter or a housemaid or a doctor or a professor or a journalist. They’re all properly paid for the forex they’ve parted with. So, that forex does not belong to them. But, to whom does that forex belong?”The bank has bought it to earn an income. So, it should make money out of it,” the same girl answered. The other students also nodded their heads in agreement.

“You’re correct. But, how should the bank put that forex to earn money?” I asked them. They did not have an answer to that question. So, I had to explain; “The bank could lend it to somebody in the country. Then, the borrower has all the right to use it in whatever the way he wishes. Or else, the bank can lend it to someone outside the country. Then, it goes out, but the foreigner has the right to use it. Or the bank could sell it to an importer or a pilgrim to India or Mecca at a higher price. Then, that buyer has the right to use it, because he has paid for it. If it’s a private asset, then, how could you say that it’s a national asset?”

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