To me, a veteran Economy observer for now a quarter of a century and more and a patriot to boot it really pains to see my Rupee being savaged like this by external forces aided by some internal vested interest demons and we are clearly helpless !
It is abundantly clear that the root of this lies in the Crony Capitalism ~ it is the Culprit
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 ! ~ their bankruptcy of Mind and Intention has bankrupted our Nation ! ~ and they now profess Financial Literacy and Financial Inclusion as Twin Prime Objectives ! ~ Do they really care ! ~ They’ve stashed away for Good ~ for Generations ! ~ and yet lead us ~ rebelling against the Supreme Court decision to ban Convicts from being MPs and MLAs and not allowing a genuine Lokpal Bill that will make all of them accountable in the fullest sense be introduced
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 $ 500 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 !
In 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 and excited the Nation
In 22 years since 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 & Eurozone 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 ! ~ it’s like when these countries make economic decisions on their subsidies for instance they need to protect their own and win but when India makes such decisions too,they need to win too !!!
So who is our Government batting For ?
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 focused 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 ! ~ to clearly benefit private players
A glaring illustration of what is simply not right is the Government now doubling Gas Pricing from April 2014 to suit a private player who had simply put it’s hands up saying their Gas Fields had less Gas than they had earlier estimated and therefore their Gas Production fell significantly and they were thus not able to supply Gas at earlier Committed Levels to the Government for Power & Fertliser Companies as per the Production Sharing Contract ~ A Minister of Petroleum who fined them US $ One Billion for this was removed ~ Of course a Foreign Petroleum Giant paid this Private Player Billions for a 30% stake in 21 of the Fields ~ Why would they if there was much less Gas than first estimated !? ~ Clearly the reason was the Price of Gas was fixed at US $ 4.2/mBtu by the EGOM for five years that ends in 2014~The Private Player was bound to sell to the Government at this price ~ but what if had less Gas to sell than committed ! ~ Now the Price has been doubled to US $ 8.40/mBtu from April 2014 and the current Minister,despite revealing that strong and powerful influences were bend on dictating terms, has ruled out any Cap as well as requiring the Private Player to deliver the unmet commitment at earlier price of US $ 4.2/mBtu ~ the rise is explained as justified to encourage Investments in Oil & Gas Drilling to make them a Viable Proposition ~ I had warned that suddenly the Private Player will announce that they have discovered more Gas ! ~ this happened on cue recently ! ~ they say they sense even bigger reserves in the same field and below levels what they are drilling now ! ~ Wow !
~and look what the Government is up to now as General Elections loom ahead ! ~ giving out doles to ensure Votes as if it’s their own Monies ! ~ last time around in 2009 they issued Farm Loans waivers ! ~ this time,after sitting on it for years, they have introduced Food Security through an Ordinance rather than a Bill after Parliament debate ,proclaiming the urgency for it and blaming Opposition for disrupting parliament all the time ~ Rs 124000 crs annually is the cost ! how will it be funded and implemented without leakage !? ~ it will have to be at the cost of capital expenditure to build infra ~ and sense this ~ it will require the government to stock up on 65 million tonnes of grain ~ and we have been witness to how thousands if not millions of tonnes have rotted when stored exposed to the weather elements and pests
So with Increasing Food Subsidy ,and the Inflationary Impact of rising Gas Prices and our Rupee being weighed down as Global Oil Prices remain High at US $ 100+/ barrel and we import more than two thirds of our Oil requirements the pressure on our Current Account Deficit is likely to remain and even intensify if our Export targets suffer
With nearly US $ 170 b of our External Debt repayable by next year,the pressure on our Rupee and Fx Reserves will be felt even though most of this would be rolled over,like the NRI Deposits of @ US $ 60 b, or replaced by new Debt
~ so what’s the government latest excuse !? ~ they now say that more FDI and opening out our economy more for it is the answer !
~ From a position of Strength we have gone to that just short of Begging ! ~ FDI is welcome but it should be on our Terms ~ Many years ago I had hosted the MD of the only AAA rated Middle East Bank and had introduced him to the RBI Deputy Governor ~ They were considering opening up their Bank in India ~ Later when I hosted him at a private dinner before he flew back he candidly told me ” You are opening out your Economy too soon ~ we will swamp you with our Monies and take over a lot of your Domestic Business and you will not have enough resources to compete ”
~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 blaming 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
Sense a Peoples Rising in this Great Democracy sooner or later because I cannot sense any Leadership that can uplift our Great Nation ~ they all have vested interests and huge skeletons
We may be forced to become Freedom Fighters yet again ~ this time fighting Domestic Demons too !
Be cautioned of the Rupee breaking new weaker grounds and even crossing Rs 70 to the US $ in the next year or two and all of us either using Public Transport to Work or Working from Home as Petrol & Diesel Prices rise to unaffordable levels for regular use of our Vehicles
Be also cautioned of Inflation not really being curbed and thus affecting your Real Rate of Returns on your Safe Deposit Investments
Is there Light at the end of the Tunnel ! ? ~ Of course there is ! ~ but we need a New Leadership to lead us to it !
Have a Thoughtful Weekend