The Falling Rupee

In 2008, when the American economy was in crisis our economy was affected. Now when it is recovering too, our economy is affected.Why Indian Rupee too sensitive? Why it is losing its shine? Why nobody wants to purchase our currency?

The American Central bank is attracting liquidity by quantitative easing (a method by which central bank infuses cash into the economy, by providing credit to the financial institutions through purchase of their assets). This lucrative offer is alluring the investments in other countries back to their homeland.Albeit all the currencies have nosedived in response to the global scenario, Rupee was ahead in the slid.Our ever widening Current Account Deficit has done the mischief. 

Imagine the Indian economy and Rupee similar to a house hold which is exchanging in silver coins. If all the traders are demanding that payment should be made in terms of gold coins only, they have to purchase gold coins in exchange of silver coins for making payments.If there is more demand for gold in the market apparently from other households also whose medium may be coins other than silver, there will be reluctance to accept silver coins in exchange of gold coins in the market.Thus the value of silver goes down. In addition to this if expenditure of the household is more than the income, they will have to borrow gold. Thus they end up in a debt cycle, which can be fatal, otherwise alternate source of income is explored.

We are depending on the imports for the lion's share of our crude oil demand. We cannot control our love for the yellow metal also. (The RBI data shows 30 percent of the trade deficit for the previous two years was due to gold imports).These two are the major draining factors of our foreign exchange.

The war looming over Syria has inducted fear in the market and the crude prices shot up. Mean while Loksabha gave consent to the Food Security bill which may further adds to the fiscal deficit. The capacity of our economy to contain the fiscal deficit and CAD is despised. Along with this dagger hanging over the head, foe in the form of inflation also ailing the economy. Fewer investments, waning industrial growth ,lesser job opportunities etc are adding oil in the fire.

We have to save our currency by hedging the gap between the Rupee and the Dollar. The currency swap arrangement -paying in terms of currency equivalent to another currency, as we have with Japan and Bhutan can help. Otherwise pacts such as the agreement with Iran,whose economy is tightened by US sanctions, to pay in Rupee for crude oil can also help.

The Irony of Drought and Flood

The state that is blessed with 44 rivers(don't imagine large rivers like  Godavari or Kauveri, these are short rivers), having annual rainfall more than 300 mm, had to approach the central government for drought relief fund in the year 2013.It had to cry again for flood relief,hardly one month after receiving drought relief. This is quite an irony.Why water is so scare during summer? Where the water from heavy rains escaping? This twin disasters are due to the mismanagement of the resources. When it is raining , all water is heading towards the sea, without saturating the soil. The avaricious clearing of forests for mono culture or plantations or for simply profiteering has deprived soil its natural qualities. When it rains, the water will saturate the soil, ooze down and replenish the under ground aquifers for quenching the thirst of the flora and fauna during dry spells. Thus the vegetation ever greened. Now the rain water just run off the surface along with it the top soil which is unable to hold to the Alma mater sans the binding action of the plant roots. Thus soil degradation goes on in recursion.

Extreme weather related disasters are recurring these days. The blame can be pronounced on global warming also.The moisture (water vapour)  holding capacity of the atmosphere is increasing, thanks to the higher concentration of the greenhouse gases.As the ocean surfaces warms more, the moisture content in air increases and as these moisture laden wind reaches land , heavy rainfall will be the result causing floods and rain related disasters. High earth surface temperature for prolonged periods is responsible for drought and forest fires . 

The damage is already done on the environment. What the present generation can do is to mitigate the consequences. We can help the ailing nature to maintain the balance. Rainwater can be harvested, allowed to replenish the water sheds and underground aquifers. Let trees and plants grow in their abode. Let the rivers live. Let the irony of flood and drought be no more.

Socialism or Capitalism ?

The Philosophy of Socialism says "From each according to his ability, to each according to his contribution". Most of the property is held common;workers have a say in the management of the organisation;all are treated equal and given equal opportunity;the market is regulated by the government. In theory the system is attractive,but its practicality considering the human nature is to be pondered. In The Soviet Union, after the initial phase of socialism, discontent among people stared raising.  When the growth diminished,the USSR decided to open the economy for capitalism. For socialism to be a success, all people should be content, they should be having a common goal, and dedication to the nation and work.

For emerging nations, socialism is the best option. It can give a common platform to everybody for the start. Competition can be introduced after a fair playing ground is achieved. Indian model of mixed economy cannot achieve the goals of either socialism or capitalism.

Let's take the experience of Kerala. Along with the democratic system, there emerged a strong communism. It was deep rooted. Thus the communist government was able to implement the land reforms most successfully in India. The economic inequality was reduced to a great extent by these reforms. There after the achievement of the state in terms of the Human Development stands as a testimony for the system. Kerala model is lauded for achieving both growth and improved income through human development. But human development wouldn't have been achieved sans social equality. The Human Development Report of United Nations Development Programme can be cited here. The indexing is done with inequality adjusted. The loss in development in India on account of inequality is alarming- in terms of education - 43%;health - 34%;income-16%. It means that even though the framers of constitution envisaged an socialist society, we are far from achieving it. This failure caused rich becoming richer and poor becoming poorer.

When everybody becomes equal, the further growth stagnates.People wont feel the need to work , if every thing is provided by the government.If profit is to be shared equally irrespective of the effort, there will be nothing to be shared. Thus the nation becomes poor. If everybody is putting effort and nation is becoming richer, there will be no workers for doing the basic works. Workers need to be hired from outside and it will drain the economy, finally will go back to square one. For maintaining the social order and growth, the economy can switch to the capitalist system realizing that the Utopian system exists only in paper .

Women & Election in India

India, the largest democracy in the world, still have to be democratic to one half of its population. Representation of women in Indian parliament is only around 10% even after 66 years of democracy. 

It is discernible that all the political parties are deceiving its women members regarding the allocation of seats. For example take the case in the constituency where a major leader is contesting - his rival candidate will be a women. The opposition parties who are sure of losing this constituency, will field a woman. It gives them satisfaction that they didn't lose the opportunity of a male contestant and also can project the number seats they allotted for women.For a self made female politician even this offer will be a hard earned fruit or other wise she should be a relative of an established politician (given the fact that most of the women legislators are relatives of politicians and most probably contesting in place of their husband in case of exigencies).

It is appreciable that our legislation have given  1/3rd reservation of seats for women in the local bodies. Initially the women members in these institutions were akin to Rabri Devi who was elected in lieu of her husband Lalu Prasad Yadav. Over years the women politicians came out of their confinement and demonstrated their capability in administration and many are being admired as role models. It may be this success and fear of losing their bastion is holding back the legislators from reserving the seats for women in legislative assembly and parliament elections.

Now it is high time to pass the long pending reservation bill and fulfill the true sense of democracy to represent the half of the population.