Diminishing rupee value to have a profound effect on the economy
A kilo of Daal costs over 100 which used to cost about one rupee in 60s. The truth is that economy has grown many notches, so have incomes but our parameters have remained unchanged which gives us a false alarm.
D UDAY Kumar exhibited his profound creativity in designing a new symbol for an Indian Rupee but it failed to ignite any excitement, either in India or abroad for the simple reason that Indian Rupee is a beleaguered currency now, for it has lost its sheen over the years. A rich title for a poor currency! Look at the history of Rupee. Historically, the Rupee was a silver based currency. This had severe consequences in the 19th century, when the strongest economies in the world were on the gold standard. The discovery of vast quantities of silver in the USA and various European colonies resulted in a decline in the relative value of silver to gold. Suddenly the standard currency of India could not buy as much from the outside world. During British rule, and the first decade of independence, the rupee was subdivided into 16 Annas. Each Anna was subdivided into either 4 paisa, or 12 pies. Since its Independence in 1947, India has faced two major financial crises and two consequent devaluations of the rupee: In 1966 and 1991, Prime Minister Dr. Manmohan Singh was at the helm of affairs when the last devaluation occurred. At the end of 1969, the Indian Rupee was trading at around 13 British Pence. A decade later, by 1979, it was trading at around 6 British Pence. Finally by the end of 1989, the Indian Rupee had plunged to an all-time low of 3 British Pence. Just look at the table below to understand as to how our Rupee has slided against US Dollar over the years.
Year Exchange rate (rupees per US$)1970 7.576 1975 8.4091980 7.8871985 12.3691990 17.5041995 32.4272000 45.0002006 48.3362007 (Oct) 38.482008 (June) 42.512008 (October) 48.882009 (October) 46.372010 (January 22) 46.21
Europe has evolved as a unified entity and a common strong currency has become one of the main corner stone of this unification. On January 1, 1999, Euro was introduced as a common currency in Europe. It was a resurrection time for doomed currencies like Italian Lira & Greek Drachma for they found a new way of living with Euro. The Euro has brought about a paradigm shift in Europe. All regions of Europe have seen a level playing field in prices related to products, incomes & living standards. Look at the comparison of salaries in US or Europe. An annual salary of 100,000 USD or Euro is considered an excellent salary whereas in India, an annual salary of even 10, 00,000 Rupees is a mere sustenance level considering the eroded value of Rupee. It neither gives you a decent standard of living nor a sense of pride in your earnings. There is indeed a need for rewriting the future of Indian Rupee which should have a strong value attached to its symbol otherwise we shall perennially be scratching our heads to calculate the exchange value whenever we step into a foreign land ( not Nepal or Bangladesh ). Every time one travels to Europe, we have to come to terms with a simple bottle of water costing 2 Euro but we freeze when we calculate that it costs 130 Rupees while in India, it is available for just Rs. 12. The shock is real. Even in Thailand or Malaysia, an Indian shudders at the prospect of shopping because Indian Rupee is so poor in comparison while the real value of the product may be same or even less over there. Are we poor or our currency is poor? The weakening Rupee has also created an imbalance in the economy over the years. The prices of the goods which were dependent on imported raw materials have increased over the years more or less in line with the price trend globally as there was no alternative but the prices of goods & commodities which had majorly local inputs have remained severely low creating a huge imbalance in incomes. No wonder, our farmers remained poor while traders and manufacturers’ incomes increased. The worst case is the salaries of the workforce involved in manufacturing local products and farm production which have remained abysmally low. This anomaly has also created typical mindsets. We are prepared to pay a price of ` 20 for a school notebook but will make hue & cry if daily newspaper having 30 pages raise its price from Rs 2.50. While India is writing its story of growth as a potential economic super power, it cannot stand on the edifice of a weak currency. It has to evolve and acquire a new symbol of its emergence as a global economic powerhouse. Introduce a new currency – may be called a Rollar which could match up with a Dollar or a Euro in terms of its value or may be even more. The salaries, prices etc. will, of course, have to be adjusted accordingly, as has been achieved in Europe. Such a strong currency will bring about a rationalisation in prices, incomes and add value to the new Indian currency and raise our economic stature in 21st century. Are we prepared for this Roll Over With A ROLLER?
Year Exchange rate (rupees per US$)1970 7.576 1975 8.4091980 7.8871985 12.3691990 17.5041995 32.4272000 45.0002006 48.3362007 (Oct) 38.482008 (June) 42.512008 (October) 48.882009 (October) 46.372010 (January 22) 46.21
Europe has evolved as a unified entity and a common strong currency has become one of the main corner stone of this unification. On January 1, 1999, Euro was introduced as a common currency in Europe. It was a resurrection time for doomed currencies like Italian Lira & Greek Drachma for they found a new way of living with Euro. The Euro has brought about a paradigm shift in Europe. All regions of Europe have seen a level playing field in prices related to products, incomes & living standards. Look at the comparison of salaries in US or Europe. An annual salary of 100,000 USD or Euro is considered an excellent salary whereas in India, an annual salary of even 10, 00,000 Rupees is a mere sustenance level considering the eroded value of Rupee. It neither gives you a decent standard of living nor a sense of pride in your earnings. There is indeed a need for rewriting the future of Indian Rupee which should have a strong value attached to its symbol otherwise we shall perennially be scratching our heads to calculate the exchange value whenever we step into a foreign land ( not Nepal or Bangladesh ). Every time one travels to Europe, we have to come to terms with a simple bottle of water costing 2 Euro but we freeze when we calculate that it costs 130 Rupees while in India, it is available for just Rs. 12. The shock is real. Even in Thailand or Malaysia, an Indian shudders at the prospect of shopping because Indian Rupee is so poor in comparison while the real value of the product may be same or even less over there. Are we poor or our currency is poor? The weakening Rupee has also created an imbalance in the economy over the years. The prices of the goods which were dependent on imported raw materials have increased over the years more or less in line with the price trend globally as there was no alternative but the prices of goods & commodities which had majorly local inputs have remained severely low creating a huge imbalance in incomes. No wonder, our farmers remained poor while traders and manufacturers’ incomes increased. The worst case is the salaries of the workforce involved in manufacturing local products and farm production which have remained abysmally low. This anomaly has also created typical mindsets. We are prepared to pay a price of ` 20 for a school notebook but will make hue & cry if daily newspaper having 30 pages raise its price from Rs 2.50. While India is writing its story of growth as a potential economic super power, it cannot stand on the edifice of a weak currency. It has to evolve and acquire a new symbol of its emergence as a global economic powerhouse. Introduce a new currency – may be called a Rollar which could match up with a Dollar or a Euro in terms of its value or may be even more. The salaries, prices etc. will, of course, have to be adjusted accordingly, as has been achieved in Europe. Such a strong currency will bring about a rationalisation in prices, incomes and add value to the new Indian currency and raise our economic stature in 21st century. Are we prepared for this Roll Over With A ROLLER?
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