THERE IS NOTHING WRONG WITH THE RUPEE--COUNTER VIEW
In India the best way to win elections is to manage the Five "M"s.. or rather is it the "Manipulation" of the Five "M"s? Mandir, Masjid, Market, Mahila and Mango (not the King of Fruits but the vegetated people). It need not necessarily be in this order.
This blog post is presented as a counter view articulating the Opportunities lying in the Rupee depreciating or rather finding its right value and how we can benefit from the same while remaining oblivious to the Five "M" syndrome.
The last two years has seen inflation in double digits and this meant that the purchasing power of the average Indian deteriorated. What was available for Rs.100/- in 2011 is not available even at Rs.120/- in 2013. However, we were continuing to buy since we believed in 2050. We purchased gold like there was no tomorrow and the yellow metal went up..up..and up. We continued to travel by cars, mostly owned despite the increase in Petrol prices. The so called smarter ones, purchased SUVs since they run on Diesel and it was cheaper. Despite the indication that diesel prices would be increased every month, the numbers of Diesel cars and SUVs kept increasing, more than the capital cost we were oblivious to the impending operating costs. That's fine as long as the rupee continues to command value, it will help us in enjoying. Come 2012-13, there is an unprecedented rise in the number of students going abroad for study. Engineers, Doctors, MBAs all passionate students taking the plunge. Now then why do we Crib? We saw it all coming and still feel cheated?
The policy makers for the Monetary control, suddenly did all that was not right. When there was supply constraints, they increased Interest rates to control Inflation. When there was need for liquidity they decided to increase the rates further. When there was need to control foreign exchange surge, they decided to stop investments abroad. What is restricted is the most easiest to crumble and that is what happened.
Now let us see how advantageous is the situation? The Rupee has found its true Value. There is a strong likelihood that speculators have pushed this beyond, but in all probability this is too good or too bad to hold on. One of the analysts who had predicted the Rupee to touch Rs.70/- to the dollar, has now predicted that the fair value of the Dollar is Rs.58/-. So someone is playing. It is not all that bad...
Till recently, the exporters were cribbing that they are not competitive abroad due to various costs. Now there is a 20% advantage, can we become competitive? Yes, even if we reduce the price by 15% we are still making 5% more. Let us take the other advantage of Competition from cheap Chinese imports. Till recently, we were cribbing that cheap goods from China are engulfing the domestic markets and we are not getting a level playing field. Now that the imports have become 20% costlier, can we be Competitive? And focus on our so called "Significant Domestic Demand"? In this manner we can actually help the Country reduce CAD. It is not all that bad...
The IT Companies were finding it very stiff due to problems in the Global economy and their pricing power was not supporting them either. Now things have changed significantly in their favour. These companies are seeing those good days. It is not all that bad..
FDI approval in retail was vociferously condemned by all politicians other than the UPA. It was said that the Indian Economy was going back to the pre-independence period and we are bringing neo-East India companies and that our farmers would be condemned to death due to this decision of the Government of India.
Now, with the Rupee depreciating, FIIs will get lower stake for their money and that means lower controls. Does it not mean that we are in an advantageous position? If they decide to put their money, it will be purely for Value and not for speculative gains. Does it not help? Can the farmers sleep peacefully?
The politicians who were opposing the FDI are now saying that Investments from abroad will not come to the Country. If this is not double standards, then what is?
They say the Food Security Bill will significantly increase the Government subsidies and negatively impact the Economy. I don't understand when was there no Food Subsidy? It is said that the Farmers will sell their produce at the Minimum Support Price and the Government will take the additional burden. I thought it was there earlier too in the form of PDS. In my view, the Farmer will get their MSP without the intervention of too many Middle men in the system and may have to contend with only the biggest Middleman of them all, the Government. However, the money will still come to them since there is the security of the republic. On the other hand, the subsidy was there earlier too. The only thing I see here is that "Food" has become a fundamental right and what was not available through the PDS due to various issues can be questioned by those who are daring to do. They have a right to question. Whether they use it or not is entirely their prerogative. I think it should be every man for himself. But still it is an advantage. It is not all that bad...
So, then what is it that which is driving the Economy mad? It is the effect of the Five "M"s syndrome:-
We were going to 2050, but the Markets take us to 1991..
We were going to 2050 and trying to say that 1991 is something which is History, but the Mandir takes us to 1992..
We were going to 2050 and trying to say that 1991 and 1992 is something which is History, but the Masjid politics is taking us back to 1947...
We were going to 2050 and trying to say that 1991, 1992 and 1947 is all something which is History, but the issues which the Mahila is facing is taking us back to 500 BC...
We are going to 2050 and together we are willing to say that 1991, 1992, 1947 and 500 BC is all HISTORY..unfortunately, someone says it is difficult since we are the MANGO people.
Hence whosoever is capable to Manage / Manipulate the Five M syndrome will be the one who will Control the Rupee better..It is not all that Bad..
This blog post is presented as a counter view articulating the Opportunities lying in the Rupee depreciating or rather finding its right value and how we can benefit from the same while remaining oblivious to the Five "M" syndrome.
The last two years has seen inflation in double digits and this meant that the purchasing power of the average Indian deteriorated. What was available for Rs.100/- in 2011 is not available even at Rs.120/- in 2013. However, we were continuing to buy since we believed in 2050. We purchased gold like there was no tomorrow and the yellow metal went up..up..and up. We continued to travel by cars, mostly owned despite the increase in Petrol prices. The so called smarter ones, purchased SUVs since they run on Diesel and it was cheaper. Despite the indication that diesel prices would be increased every month, the numbers of Diesel cars and SUVs kept increasing, more than the capital cost we were oblivious to the impending operating costs. That's fine as long as the rupee continues to command value, it will help us in enjoying. Come 2012-13, there is an unprecedented rise in the number of students going abroad for study. Engineers, Doctors, MBAs all passionate students taking the plunge. Now then why do we Crib? We saw it all coming and still feel cheated?
The policy makers for the Monetary control, suddenly did all that was not right. When there was supply constraints, they increased Interest rates to control Inflation. When there was need for liquidity they decided to increase the rates further. When there was need to control foreign exchange surge, they decided to stop investments abroad. What is restricted is the most easiest to crumble and that is what happened.
Now let us see how advantageous is the situation? The Rupee has found its true Value. There is a strong likelihood that speculators have pushed this beyond, but in all probability this is too good or too bad to hold on. One of the analysts who had predicted the Rupee to touch Rs.70/- to the dollar, has now predicted that the fair value of the Dollar is Rs.58/-. So someone is playing. It is not all that bad...
Till recently, the exporters were cribbing that they are not competitive abroad due to various costs. Now there is a 20% advantage, can we become competitive? Yes, even if we reduce the price by 15% we are still making 5% more. Let us take the other advantage of Competition from cheap Chinese imports. Till recently, we were cribbing that cheap goods from China are engulfing the domestic markets and we are not getting a level playing field. Now that the imports have become 20% costlier, can we be Competitive? And focus on our so called "Significant Domestic Demand"? In this manner we can actually help the Country reduce CAD. It is not all that bad...
The IT Companies were finding it very stiff due to problems in the Global economy and their pricing power was not supporting them either. Now things have changed significantly in their favour. These companies are seeing those good days. It is not all that bad..
FDI approval in retail was vociferously condemned by all politicians other than the UPA. It was said that the Indian Economy was going back to the pre-independence period and we are bringing neo-East India companies and that our farmers would be condemned to death due to this decision of the Government of India.
Now, with the Rupee depreciating, FIIs will get lower stake for their money and that means lower controls. Does it not mean that we are in an advantageous position? If they decide to put their money, it will be purely for Value and not for speculative gains. Does it not help? Can the farmers sleep peacefully?
The politicians who were opposing the FDI are now saying that Investments from abroad will not come to the Country. If this is not double standards, then what is?
They say the Food Security Bill will significantly increase the Government subsidies and negatively impact the Economy. I don't understand when was there no Food Subsidy? It is said that the Farmers will sell their produce at the Minimum Support Price and the Government will take the additional burden. I thought it was there earlier too in the form of PDS. In my view, the Farmer will get their MSP without the intervention of too many Middle men in the system and may have to contend with only the biggest Middleman of them all, the Government. However, the money will still come to them since there is the security of the republic. On the other hand, the subsidy was there earlier too. The only thing I see here is that "Food" has become a fundamental right and what was not available through the PDS due to various issues can be questioned by those who are daring to do. They have a right to question. Whether they use it or not is entirely their prerogative. I think it should be every man for himself. But still it is an advantage. It is not all that bad...
So, then what is it that which is driving the Economy mad? It is the effect of the Five "M"s syndrome:-
We were going to 2050, but the Markets take us to 1991..
We were going to 2050 and trying to say that 1991 is something which is History, but the Mandir takes us to 1992..
We were going to 2050 and trying to say that 1991 and 1992 is something which is History, but the Masjid politics is taking us back to 1947...
We were going to 2050 and trying to say that 1991, 1992 and 1947 is all something which is History, but the issues which the Mahila is facing is taking us back to 500 BC...
We are going to 2050 and together we are willing to say that 1991, 1992, 1947 and 500 BC is all HISTORY..unfortunately, someone says it is difficult since we are the MANGO people.
Hence whosoever is capable to Manage / Manipulate the Five M syndrome will be the one who will Control the Rupee better..It is not all that Bad..
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