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Dollar wise and rupee foolish

Dollar wise and rupee foolish
Highlights

If we leave aside the political situation whose stink doesn’t bother the mango people in banana republic, the issue that is grabbing every eyeball in the country is the free fall of the rupee. It’s diving at such a speed as if there is no obstruction or nobody is trying to stop it in its track. The Indian rupee has replaced the onion as the hot topic trending on social media.

The belief that anything imported is better than indigenously produced is misplaced and, in fact, the foreign craze among sections of people, particularly the affluent, is ruining the manufacturing industry as well as farm produce.

If we leave aside the political situation whose stink doesn’t bother the mango people in banana republic, the issue that is grabbing every eyeball in the country is the free fall of the rupee. It’s diving at such a speed as if there is no obstruction or nobody is trying to stop it in its track. The Indian rupee has replaced the onion as the hot topic trending on social media.

Rupee and onion are vying with each other to move as fast as possible in opposite directions. While the former has chosen the downward spiral the latter upward movement. Nevertheless, their individual or combined impact on the people is the same: Inflation. How many onions can you buy with one rupee? Must be joking! If you are lucky, you may get an onion bulb weighing not more than 15 gr. Similar is the case with other vegetables.

Strictly speaking, there is no relation between depreciating rupee and appreciating onion since the former is weighed against an international basket of currencies, in monetary value, of course, and its exchange rate against dollar and other global trading currencies is determined; whereas onion is 100 per cent home-grown product and there is no link between it and the international currency market and a crisis in its availability means that there is something wrong in managing production-storage-distribution system in the country. But if the government tries to import tonnes of onions from other countries to meet shortages and bring down prices, the bill will surely make the government shed a few tears as it has to settle it in dollars.

The link is invisible but the end result is we, the consumers, have to pay for the weakening rupee, be it food or fuel for our vehicles. It is a vicious circle where money and inflation will be chasing in a bid to neutralize each other. Once the race starts, rarely does a government succeed unless it makes extraordinary efforts to stop both in their tracks.

The country is going through such a situation where free-wheeling politics are pushing the rupee’s free fall and ordinary people are feeling the pinch. How the government arrests the trend is best left to experts – no dearth of them in the country – and policymakers who need to introspect rather than blame external factors for all self-induced wounds.

Or, will it be wise to heed what the International Monetary Fund says: Benefit from the rupee slide by increasing exports and by drastically cutting down imports of non-essential commodities and luxury items, not to speak of the king of metals, gold.

Stopping them is not easy. Since we have become part and parcel of the trading world, we need not go around the globe in search of anything exotic and unique. They are available here now. But the price one has to pay is heavy and when the country’s economic troubles are multiplying by the day, the import costs soar.

Then why should consumers buy the imported stuff which is locally made or produced like in the case of fruits and vegetables or fresh cut flowers?

For example, according to the Directorate General of Commercial Intelligence and Statistics, the import of apples had increased by over 50 percent from 134,576 tonnes in 2010-11 to 199,262 tonnes in 2012-13. It says China alone exported 73,648 tonnes of apples to India, out of the total Indian import of 188,071 tonnes in 2011-12. When Himachal Pradesh and Jammu & Kashmir produce enough apples for the whole Indian population, why should such large quantities of that fruit be imported? Good food for thought, indeed.

There is little realization among buyers that it will take at least two weeks for imported fruits to arrive into the market. To increase their shelf life, exporters use a variety of chemicals to keep them fresh whereas locally produced fruit will reach the market within a few days, sometimes in a few hours.

The belief that anything imported is better than indigenously produced is misplaced and, in fact, the foreign craze among sections of people, particularly the affluent, is ruining the manufacturing industry as well as farm produce.

In a way, the government too has to be blamed for the sort of topsy-turvy policies in a competitive world where cheap Chinese goods flood the market threatening the local industry and, in some cases, manufacturers have to close down their businesses unable to face the Chinese onslaught.

It is time, for the people too, to give a thought to what they are buying. We can definitely survive without American and Chile apples, Chinese pears, Kenyan mangoes, Iranian cherries, French grapes, Dutch fresh flowers, New Zealand cheese, et al. Their imports have been leap-frogging year after year. Even if one argues that it is the nouveau riche who pays for the palate fads, the question to be asked is whether billions of dollars should be spent to satisfy personal preferences and tastes to prove social standing and status.

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