Friday, September 27, 2013

Ordinance on Convicted Lawmakers

Gandhiji and B.R.Ambedkar will definitely  be rolling in their graves.  They probably would even be sorry for what they did, for it is going to be hard for them to see their beloved people where we are today! Imagine Nehru speaking to Gandhi about an ordinance that that protects convicted lawmakers from being immediately disqualified. May be in those days it would have still made sense, after all there were many freedom fighters convicted for political reasons. I wonder how would Ambedkar and his constitution drafting committee react to this development. I bet they did not in their wildest dream think of a scenario like this one. They were after all men of honor and despite their best efforts could not envisage a scenario of our democracy being hijacked by dishonorable men at whose helm is a man I esteemed so much, a person who was supposed to be one of the best brains in my profession! Sorry Dr.Singh this is indeed the last nail in the coffin. 
It is not surprising that politics is the last refuge of a scoundrel, but it is indeed surprising that they have become shameless and blatantly so. Despite being greedy, power hungry and all that they were, there were some ethics, a unspoken code of conduct, a certain dignity and respect towards the electorate. After all they needed us twice every decade, sometimes  even more than that!
Surprisingly, it is out right stupid.  They could have done it intelligently by introduced a bill, there could have been  a  pretense of a debate in the parliament, a guise of functional democracy.  No! they want to take the shortest and quickest route even if it meant circumventing the democratic process, and of course disregarding our esteemed supreme  court.  This is a stupid move because you do not shoot yourself in the foot during an election year, not to forget anti-incumbency and  a formidable opponent with a strong track-record.  It is a wonder that Congress forgot that there are educated and urban voters who are can see through vote-bank politics who will definitely be upset by such open disrespect to the electorate.  
No wonder the Gen-Z  leaders in the Congress party are openly criticizing the ordinance. Kudoos to Rahul Gandhi , Milind Deora for calling a spade a spade. Not that they are always on the ‘right’ side, but this time they are. For once Rahul Gandhi said something I whole heartedly agree. This ordinance is utter nonsense. Thanks Rahul for bringing legitimacy (you can do that, thanks to your parentage)to a point of view so diverse from the leaders in your party. Thanks Rahul for making us the Aaam Janta feel a little less despised. Thanks Rahul for making us, voters feel a little more than just  votebank=function(caste, religion,(money+bottle)).

Monday, September 16, 2013

Masala Dosa and the purchasing power of rupee.

The other day I watched a Kannada movie called ‘Super’ by Upendra. Like all Upendra movies, the movie had a few feel good, a few thought worthy elements but on the whole it was stung into a very gaudy but blotchy story piece. The element that connect this piece to the movie is the exchange rate of a Rupee! In that movie a Rupee is equivalent to $100! Wow. So the film makers aspire for Rupee to become so expensive. May be it an aspirational factor, maybe there are a lot of us who think it is desirable to have an expensive Rupee. What does that really mean in the context of recent depreciation of Rupee?
To begin with let us think in terms of Masala Dosa. I say Masala Dosa, because that is one of the first things I buy as an expat on a pilgrimage home! In 2007, the price of a Masala Dosa in say a typical Darshini in Bangalore would cost about  INR 15. As given in the table below, in terms of Dollar one Masala Dosa cost $0.41. In 2009, my next subsequent trip to India, I found that the same Masala Dosa cost about INR 25 or about $0.61. Currently the same Masala Dosa costs about INR 50 or about $0.94.
Purchasing power of Rupee in terms of a Masala Dosa
$1 = INR
Cost of Masala Dosa
Cost of Masala Dosa
INR 15
₵ 41
INR 25
₵ 61
INR 50
₵ 79
Annual inflation

27% (INR terms)
18% ($ terms)
Annual Depreciation

One Masala Dosa should approach $0.81 at the depreciation rate of 12%

At the same time, Rupee has depreciated about 12 % per annum(roughly, it is never a straight line process, there were lots of ups and downs, but roughly the trend) from about INR 37 for a dollar to about INR 63 right now.  So if we adjust the price of Masala Dosa in terms of depreciation, we will see that it should approach $0.81. Which indeed it did, at current rate it is about $0.79. So  thinking  of purchasing power of rupee in terms of a Masala Dosa, currently rupee is fairly valued after all.
Sorry Upendra, INR 1 approaching $100 still appears a distant dream, definitely when inflation in India is what it is and fiscal deficit is what it is.
The depreciation of rupee is not to be interpreted as a bleak development  either. On the one hand imports become more expensive, so hopefully Indians buy a lot less of gold, a lot less of the flimsy toys made in China, and petrol (may be rely a lot more on public transportation). On the other hand our exports will become competitive in the global markets because everything in global markets are denominated in Dollars. Hopefully our exporters will find more buyers and earn more Dollars improving our balance sheet. Over a period of time, if fiscal and monetary policies are healthy, and the central government is sane, we can hopefully see a time when  inflation and also Rupee will experience some degree of stability.