I had penned this in anguish last month on July 10,2013 but left it as a draft…now with the rupee free falling further to record a 50% depreciation inside two years what can I say!…an extraordinary nation led by ordinary people who are even allowed to run a full five year term and may even scarily form UPA III next year! to further compound their venal and visionless mess !…thought I should post it
”
To me, a veteran Economy observer for now a quarter of a century and a patriot too boot it really pains to see my Rupee being savaged like this by external forces and we are clearly helpless ! ~ it is abundantly clear that the root of this lies in the Crony Capitalism ~ it is the Culprit and that our political and bureaucratic and financial and corporate czars have literally sold out our nation on a host of fronts allowing us to be rammed despite full knowledge of the ramifications in the short and long term ~ an extraordinary nation run down by ordinary men ! ~ While a depreciating Rupee actually is an Export Booster and a good thing if it can be leveraged~ but in reality the situation is that our Imports are US $ 599 b while Exports are US $ 300 b ~ our FX Reserves have been @ US 300 b for five years now but our external debt has zoomed to US $ 400 b ! ~Iin 1991 our Rupee was Rs 18 to the US $ before it was devalued by 18% overnight by the FM and now PM,Mr Manmohan Singh as he introduced a host of modern economic reforms ~ In 22 years it has sunk past Rs 60 to the US $ despite achieving high GDP Growth rates in many years ~Our Rupee should rise when our Economy rises ! unless of course USA rises relatively more !~ but how do you explain that our Rupee continues to sink despite USA battling recession and economic woes and being a highly leveraged economy ! ~ is our continuing dependence on Rising Oil Imports to fuel our Economy to achieve high GDP Growth Rates solely to blame !? ~ Those who lead us and make Policies that rule us simply have failed to understand the practical co-relation & realities and impacts of Inflation,Interest Rates and Exchange rates ~ these political leaders have Miserably failed in negotiating hard with USA and have been bullied and ,I daresay, even blackmailed in allowing them access to India cheaply when their own markets are saturated and they need ours for their survival ! ~they have simply no right to lead us any longer ~ we need to find strong and wise alternative leadership ~ for the past eight years they focussed on increasing the Growth rate on Corruption while allocating coalmines,telecom spectrum and other resources and granting Infra contracts and running down Government Owned PSU Banks,Telecom Companies (MTNL,BSNL) and even our National Airline ! ~and look what they are up to now as General Elections loom ahead ! ~ giving out doles as if it’s their own Monies ! ~ Food Security Bill will be funded from where !? ~ it will have to be at the cost of capital expenditure to build infra ~ so what’s the government latest excuse !? ~ they now say that more FDI and opening out our economy more for it is the answer ! ~ My strong belief is that we are a resilient and strong people and we must go back to the basics of commerce and manufacturing ~ just look at how our manufacturing has dropped ! ~our furniture comes from Malaysia,our Mobile Phones from Korea and even our Gods are Made in China ! ~ We need a fresh and wise in the economic and political sense and a selfless and moral leadership to lead our Nation ~ we need to rise above being victimised and making an excuse for this state of affairs by the ugly trilogy of Communalism,Corruption and Criminality ~ I’m told to get real and not be idealistic ! and that any Peoples Rising urged on by the likes of Kejriwal and Anna Hazare will fade out ~ but do we then deserve who we get ! ~ use your Vote wisely”
3 thoughts on “Rupee ! Oh ! Rupee!”
I think crony capitalism is a part of the cause but I wouldn’t say its at the root. If that was the case, the Ruble should probably be doing a lot worse than the Ruppee. In fact the Real has fallen even more than the Ruppee over the last two years so India is not alone in facing a currency crisis. Generally, the last one year or so has seen investors appear more keen on moving capital from EM to developed countries esp. the US where the shale gas boom is likely to seriously change the global economic landscape. Apart from global economic conditions, investors are already looking ahead to 2014 elections and if money is moving out of India now, its probably influenced more by the uncertainty over next year’s elections than by UPA’s past performance. You could also argue that investors fear a potential Modi regime and are getting out while they still can. I’m not saying this is the case, but it certainly is a possibility. Generally if you think about next year’s elections its a choice between an under performing UPA and an unknown Modi led coalition.. investors don’t like uncertainty, and so as the elections get closer, they are only more likely to move money out irrespective of what the govt does in the interim. As far as the 1991 reforms go, even Ratan Tata has said that it is still the same team but lacking conviction and too many forces at hand but everyone is forgetting the one man of 1991 who played a much bigger role in pushing reforms through than is given credit for – Narasimha Rao. Manmohan can execute but to get political consensus and enable action you need a Rao which is missing today. Also, the media loves keeping the limelight on political parties but there is this one org called the RBI which also plays an imp role. In 1991, Rao made Manmohan FM to fix the crisis. Perhaps, Manmohan making Rajan the RBI Gov now will be a similar move that enables welcome changes to come through the central bank. Lastly, there is obviously panic and fear that plays in to the equation and there will obviously be a market correction at some point as the current free-fall is based more on emotions than equations. If I wasn’t highly levered up after an expensive MBA, I’d be putting all my money on longing the rupee (mid-term) and oil (short-term), a sort-of-hedged investment that anyone with money to spare should consider! If you are already in India, getting long exposure to oil should help hedge some of the downside exposure to ruppee going forward.
Ps. glad to see you back online!
Sir,
Welcome Back.
Last election the estimated exp for election by parties was pegged in range of 50000-60000 Crs..this time it may cross 1L crs…. corporates will not open purse..minning,Infra and others cash generation sectors are bleeding…real estate do not a any real value now……….the silver linnnig is money stashed abroad…that has to come and rupee will go back to 59 levles.
But the person who held this energy starved nation to ransom to increase GAS price will surely fund them
Regards
Anurag
Glad to see you again.
Agreed to what you said.Many people say there is no difference in any political party,so why change,well to that one can say ,you have allowed single party to loot the nation for 60 years please allow others for at least 20 years :),else enjoy this torture.