Wednesday, December 14, 2011

Rupee at 54 to a dollar - the lowest ever

Rupee is falling. And is loosing respect. Needless to say, it is loosing respect in India too. The inflation in prices has made it impossible for poor to buy common items. They have become so costly. The government is passing laws and amendments to laws to control economy. This method of controlling the economy is akin to saying "You marry but you shall not have sex". How can making laws control the economy? Only market forces has to control the economy. And government should encourage such steps which shall encourage market forces controlling the economy. This will give value to the rupee.
Then there is the problem of huge fiscal deficit. The government expenditure being the major factor in the deficit. Salaries and operating costs are piling up day after day and no one seem to be taking steps for this. Why should government employees loose confidence? We have profit making public enterprises contributing to the economy in a positive way. Why should we get scared of disinvestment? Disinvestment in shares of public enterprises will allow market forces to take care of deficit. If not much decrease in deficit, the fact cannot be denied that accountability will increase. This will benefit the whole of India. You and me. Everyone will benefit by the rupee.
We may also offer shares of our good performing public enterprises to non-Indians. This will keep the dollar in check. Also the modernization and better practices will come to public enterprises and the efficiency of the public enterprises will improve. 

18 comments:

Rahul Bhatia said...

Too many problems and too few people looking for solutions!

Kirtivasan said...

Our PM is trying to do a lot. In disinvestment, FDI and all. SEBI chief currently is also a person close to our PM.
But opposition stalls the operation of parliament and crucial issues take a backseat. What the opposition want is unclear.

Kirtivasan said...

Commodity exchanges should be encouraged at all important cities. All materials and consumables should be sold at the prevalent rate in the exchange.
Necessary law should be made in the parliament.

kalaiselvisblog said...

so true buddy... i agree with u.. nicely said.... they should take some measures to control this economy...

Kirtivasan said...

Parliament should make law specifically for organic items like rice, flour, vegetables etc. and non-organic items like water, salt, detergents etc.
Such a law will act as guidelines for all traders and brokers.

sm said...

yes for this one of the major reason is corruption.
2nd is the gambling of rupee which is allowed.

Kirtivasan said...

Cooperation is a must for anything in this country.

Kirtivasan said...

RBI is taking care of these things.

Kirtivasan said...

US leaves Iraq. Dollar gains respect and value. EU is involved in its own turmoil. Rupee ignored or forgotten.
India has to take steps which gives all of us hope in rupee.
International situation is fluid and it is time we strengthened our own economic stand.

Kirtivasan said...

Futures trading in commodities should be taken up by all major stock exchanges.
Shares and bonds should be linked to commodity exchanges and not to rupee.
Rupee should be solely managed by RBI through banks.

Kirtivasan said...

Most of the shares and bonds are of commodities makers like soap, detergents, textiles etc. But of late a lot of financial companies have come up. These do not have commodity back up. Such companies should link to commodity exchanges and not rupee.
SEBI chief should take up this issue with GOI.

Kirtivasan said...

Proper accounting is a must. A loss is a loss. One must accept it sportingly.
RBI and other financial institutions should approach UN and try to make India specific accounting practices.

Kirtivasan said...

Moody's action on indian and foreign currency bonds is giving hope of a new age.

Kirtivasan said...

We should not loose hope. We should be ever optimistic.
Japan's swap of $10b at a time when Indian economy seemed moving down is the much needed medicine for an ill economy.
The Economic Times article on 8 faiths for 2012 tries to boost our morale.
The eight faiths are the faith that Parliament will pass the banks, pension, companies act and other finance related bills.
The growing car, internet, music and film economy.
High and quality spending by Indian consumers.
India's penchant for frugal engineering. ( A lot of scope exists here. Innovation for kanjoos people.)
Let us keep our spirits high and look forward to a great new year ahead.

Kirtivasan said...

Nobel prize winner Shri Amartya Sen has welcomed food security act. It is to be seen how the government goes about implementing it.
Cooperation from all states and all districts are needed to make this dream plan a success.

Kirtivasan said...

Indians are hard workers. More of kinetic energy type than potential energy type. We can work from dawn to dusk almost throughout the year.
Food Security Act is good from this angle.

Kirtivasan said...

Mutual funds and Insurance funds can now invest in companies more favorably. The lock-in period for parking of funds has been relaxed for these two.
As an investor what does it mean to you? I would say a riskier environment for you in company shares. Company and shareholders can loose confidence because of absence of funds with lock-in and this can impact your prudent investment in stocks.

Kirtivasan said...

RBI has lowered CRR by 50 basis points.
Do not be fooled by these actions. These have very little significance.
Of course the stock market is looking at excuses to ride higher and the brokers say CRR lowering is making the sensex high.
But to a common man reduction in CRR is only a mirage in hot Delhi road.