Mahanth S. Joishy, Editor-in-Chief
The Indian rupee has continued falling steadily against the US dollar this May, breaking new record lows continuously through recent weeks. The free fall continues, and as of today the magic number stands above 56. This news is unwelcome to Indians in an environment that includes severe hikes in Indian fuel prices, and dramatic drops in Indian stock market indices.
Some of the causes and consequences may seem obvious, while others appear murky in the crystal ball. Below is a pithy analysis.
It’s All Greek to Indians. Or is it? Indian Finance Minister Pranab Mukherjee has blamed the eurozone crisis for the downward spiral and claims the government has taken, and will continue to take measures to stop the bleeding such as selling off dollar reserves. At least several economists have disagreed that Greece & Co. are to blame, and think the problem starts closer to home, in Asia. Or could it be about the price of oil?
Vacationers Beware. Indians who planned business or pleasure trips abroad will unambiguously take a hit because buying power is compromised. Meanwhile, Americans and NRIs traveling to India will be pleasantly surprised to find that their dollars are going further all of a sudden within the same trip. In theory the Indian tourism industry should benefit from increased domestic travel and foreign vacationers as a result, but the Air India pilots’ strike and Kingfisher Airlines woes have kept prices high. People also tend to book vacations well in advance.
Exports and Imports. America is India’s biggest trading partner. Indian companies who depend on exports to the West will enjoy the rupee’s fall in price, but are finding that some foreign customers may ask for discounts, partly nullifying short-term gains. American manufacturers and service providers with sales to India are going to find it difficult to keep export prices low. This is not welcome news for the Obama administration and we expect that the US government will attempt to assist if the slide continues, though we have not yet heard official word on this. On the other hand, analysts opine that the free fall must be solved by the Indian government itself.
Business Process Outsourcing. The BPO industry is one of India’s most important, and the planning for BPO companies has just gotten a lot more difficult.
The Non Resident Indian Effect. NRIs will be pleased that their investments in real estate and remittances to relatives will go further. The rupee slide will likely encourage a fresh flow of cash into India.
Coming to America. Like every summer and fall, a massive crop of Indians are readying themselves for their trip to America for higher education, jobs, or marriage. Many are coming for the first time. Unlike tourists they intend to stay for a long time and often, for life. That means they’ll never get their losses back, especially on university tuition- a real killer. Those bringing a large amount of savings with them will be hoping for a recovery of the rupee soon, for they stand to lose a hefty chunk at the time of exchange. But it’s also a trap; fears of the rupee falling further will prevent many from delaying this inevitable shift in funds from one currency to the other.
Again, the crystal ball is murky. But with (a) paralysis in both US and Indian governments on most major questions, (b) uncertainty in the Eurozone, (c) volatile oil markets, and (d) a sputtering Indian economy, we expect that the conditions causing the current slide in the rupee will be around. These make the path to 60 Indian rupees per dollar a legitimate possibility in the near future.
Eye Opener: An Indian American Visits Pakistan. Gutsy gentleman. Please take the time to review my suggestion made several years back:
Afghanistan-Pakistan-India-Bangladesh Economic Union
A surefire cure for Islamic Fundamentalism
Improbable? Probably! Impossible? Never! We have to give it our best shot all the same: I am proposing an economic union of Afghanistan, Pakistan, India and Bangladesh – The AFPAKINBA Economic Union. It is the only sane way out for fighting Islamic Fundamentalism.
Who could have believed in 1945 that Europe’s two most implacable foes would, in a few years time, be best of friends; so much so that they would form a camp opposing the unilateral invasion of Iraq in 2003 by the country that saved them from fascism, America. So! There it is: the impossible happened. Not only did Germany and France shake hands but most of Europe decided to join them too, forming a formidable economic giant, the European Union. Is it then that inconceivable that Afghanistan, Pakistan, India and Bangladesh couldn’t join in an economic union too?
Pakistan came about because in its nascence Mohammed Ali Jinnah saw the possibility of an improvement in the economic, technical, educational and Industrial conditions of the Muslims of undivided India, much to the chagrin of the great Indian leaders: Mahatma Gandhi, Jawaharlal Nehru, Abu Kalam Azad and others. But by so doing, Pakistan thwarted the Communist juggernaut from rolling into India; stymied Russia’s manipulation of the Great Game and saved India’s nascent democracy to obtain its rightful place under the sun.
At the conclusion of World War II, India to all intent and purposes was a communist country. Inspite of the fact that the leaders of its independence movement espoused a socialistic cause, communist cells abounded in its every corner, from the Northwest Frontier province in the West to the hills of Assam in the East. Had it not been for the foresight of Jinnah and his supporters and the creation of Pakistan, the world at large would have been singing today a communist tune, except perhaps for the United States of America – the bulwark of democracy and human freedom. A specter so horrific that it is not at all palatable for the imagination!
The Western World, the Middle East and modern India owe their very existence to the tiny giant called Pakistan. This country for all its ills and a morass of corrupt dictators has, throughout its history, stood by the free world. And, can rightfully boast today to have uplifted the position of the Muslims of the subcontinent. Pakistan is the most technically advanced and militarily powerful Muslim country in the world. It has several universities, medical colleges and engineering institutions. It is self sufficient in all foodstuffs. It has produced Nobel Laureates, world class surgeons, atomic scientists. It owns the so-called “Islamic Bomb” and the means to deliver it. It has its own airline, so efficient that it loans its personnel to the airlines of other Muslim countries and also trains their personnel. One of the oft-touted shortcomings of the Muslims of British India was their lack of aptitude in banking and insurance. In this area too, the Pakistanis have excelled. They have proved to be expert, if sometimes roguish bankers, on a par with the Swiss; consummate actuaries and aggressive underwriters.
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With the Muslims of Pakistan at par economically, scientifically, technically and otherwise with Indians, the time has now come for the people of the subcontinent to bury the ‘religion hatchet’ and come together again. In the process they should invite Afghanistan to join with them too. The countries of Afghanistan, Pakistan, India and Bangladesh should form an economic union The AFPAKINBA, patterned on the European Economic Community. If such a union were to come about the problem of Kashmir, which has festered for too long, will automatically become a non-problem. The alternative to the solution I am proposing is too stark and frightful to even contemplate.
The cancer of Islamic Fundamentalism, which is eating away at the vitals of the societies of these regions, must be nipped in the bud. Fundamentalists of every persuasion throughout history have been the banes of civilization. In Inside Terrorism, Bruce Hoffman tells of fanatics from Hinduism, Judaism, Christianity and Islam over a period of 2000 years (Columbia University, 1998). He concludes: “More than 2000 years ago the first acts of what we now describe as ‘terrorism’ were perpetrated by religious fanatics. Indeed, some of the words we use in the English language to describe the terrorists and their actions are derived from the names of Hindu, Jewish and Muslim terrorist groups active long ago.” Fundamentalists of today are no different. They are the equivalent of the erstwhile Jewish Zealots of the Roman era, the Crusaders of Europe, Hasan Al Sabbah’s Assassins of Central Asia or the goddess Kali’s worshipping Thugs of India. Every member of these fundamentalist organizations throughout history carried out his nefarious deeds, sworn to sacrifice his own life, all in the promise of a heaven in the hereafter. Acts of terror are carried out by the section of a populace that feels disenfranchised; that feels it does not have a voice or say in the control of its own destiny. Witness the revolutionary movements across the world and across the spectrum of history. The American Revolution, The French Revolution, The Russian Revolution, the Indians against the Bristish, the Maoists against the Kuomintang, the Vietnamese against the French, the Iranian Revolution, the Bangladeshis against the Pakistanis the list is endless. All these uprisings had one element in common: their genesis came in a population that was economically downtrodden and not in control of its destiny. Islamic Fundamentalist or for that matter Fundamentalist of any other stripes feel the same. Their menace cannot be overstated but the success of their plan is inevitable. With proper foresight, it can be avoided. The slide to darkness can be averted if Afghanistan, Pakistan, India and Bangladesh act together in concert and act quickly. The benefits, both economical and political, to follow from a communion of the four countries will be incalculable not only for the current generation but for all generation to come.
I beseech President Karzai of Afghanistan, President Musharraf of Pakistan, Prime Minister Manmohan Singh of India and Prime Minister Begum Khaleda Zia of Bangladesh to stop thinking of their respective missions in religious terms and instead start looking at themselves as statespersons in the fashion of their region’s greats like Mohandas Karamchand Gandhi, Allama Iqbal, Mohammed Ali Jinnah. Respected leaders of the four countries the time has come to act and the time is now because if you leave it late, it might be too late.
About the author:
Zaheer Jan is a former Chairman of Bedminster Democratic Committee. He has been active in the US politics since 1999, supporting Tim Carden in his 2000 campaign to House of Representatives for the US 7th Congressional District and Senator Corzine in his 2005 campaign for Governor of New Jersey.
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