Voice from the Rooftop

Blog of Vincent Augustine D'Souza

Category: India

Rupee rate and subsidies

There are people who speak against electricity, water, fertilizer, diesel, kerosene, petrol and LPG subsidies. Some even say diesel and LPG subsidies benefit middle class and not poor people. They do not speak against corporate debt restructuring (CDR) and exchange rate manipulation to keep rupee value low. Lakhs of crores of rupees are lost due to CDR. Rupee value is kept low to benefit exporters. For the profit of few exporters 125 crore Indians are made to suffer. If rupee appreciates there is no need for diesel, kerosene, petrol and LPG subsidies.

Foreign exchange increase due to buying dollars has kept value of rupee low against dollar. A dollar is more than more than 60 rupees. Below given are figures for three weeks.

Forex increase is in million dollars. Forex reserve is in billion dollars.

Week ended Forex increase
(in million US $)
Forex reserve
(in billion US $)
6-Jun-14 203.20 312.500
13-Jun-14 950.90 313.536
20-Jun-14 1385.00 314.922
Total 2539.10

If RBI had not bought dollars rupee would have been less than 60 per dollar. If rupee is allowed to appreciate it will be 30 rupees per dollar in a few months. There will be no need for any subsidy and prices of diesel, kerosene, petrol and LPG can come down. Consequently prices of many commodities dependent on them can come down.

India should have agreements with countries for mutual acceptance of currencies. American dollar should be accepted from USA only. From euro zone countries it should be euro. From Russia it should be rouble. From Kuwait it should be Dinar. From UAE it should be Dirham. From South Africa it should be rand. From Saudi Arabia it should be riyal. India should pay in rupees for imports. No trade with any country that does not want currency agreement.

Corporatism thrives. Democracy is a myth except perhaps in Switzerland where there is direct democracy to a great extent. In capitalism those who make loss go out of business. In corporatism when corporates make profit they keep it, when they make loss it goes to taxpayers. Ordinary people have no choice in decisions. That is true in USA, India and many other countries. It is oligarchy is most countries.

Rupee value has been brought down by vested interests. For some years there was quantitative easing of restrictions which meant printing of notes. For five years Federal Reserve Bank of USA engaged in bond buying of 85 billion dollars per month. That means 1.02 trillion dollars per year. Rupee was 40 per dollar. It should have been 20 rupees per dollar. Instead it became more than 60. Bond buying continues in 2014 though less than 85 billion dollars per month. It has been 75, 65, and 55. USA had debased its currency. India has debased its currency even more.

Narendra Modi had promised good days. We have not seen good days. Prices have gone up. Railway fares went up. It may be good days for corporates, exporters and traders but not for ordinary people. For an ordinary person it does not matter how high is the Sensex. Prices of onion, garlic, food grains etc. matter. Modi has to see that inflation is zero, prices are under control and rupee appreciates against dollar and other currencies. Otherwise disillusionment will set in fast and he will be in trouble.

Iraq Civil War

It is civil war in Iraq. ISIS is in war with Iraq’s government headed by Nuri Al-Maliki. ISIS captured Mosul on 10/6/2014. The world noticed. Soon ISIS captured Tikrit.
There are Indians in Iraq. Nurses don’t want to come back. They have taken education loan and loan for visa. In Mosul 40 construction workers did not leave on time. They are in captivity except for one who escaped. In Tikrit there are 46 nurses.
Many Indian Shias have volunteered to fight in Iraq against ISIS. If Sunnis also want to join the fight India will have a problem. It can be Shias and Sunnis fighting in India. Government should take steps to prevent such occurrence.
Barack Obama talked about sending 300 advisers to Iraq and air strikes on ISIS but ruled out boots on the ground. He wants Nuri Al Maliki to quit.
Al-Sistani called on Shias to fight ISIS. The Shias marched in Baghdad displaying their weapons. They don’t want American air strikes on ISIS.
Iran and Saudi Arabia do not want to meddle in Iraq.
Some Americans want military intervention in Iraq. Otherwise it will become a base for terrorists to attack USA. Americans opposed to military intervention in Iraq say USA supplied weapons to rebels in Syria. Area under rebels is jihadist wonderland. In Libya a dictator was removed. Libya became a jihadist wonderland.
ISIS has captured Qaim, Rawah, Anah, Rutba, Turaibil crossing with Jordan and Waleed Crossing with Syria. Many Iraqi soldiers surrendered their uniforms and weapons. It seems they were promised safe passage if they surrendered. ISIS is known to be brutal, ferocious and ruthless. There are videos of ISIS fighters shooting captured soldiers. ISIS had support from locals, mostly Sunnis disaffected with Maliki government, so they could march quickly.
ISIS wants to capture Najaf and Karbala and if they get close to those cities Iran can enter war on the side of Shias. At that time Saudi Arabia and some other countries are likely to join war against Iran.
It is an opportunity for Kurds to establish themselves as a country. If Kurds succeed, Kurdistan will have territories from Turkey, Syria, Iraq and Iran. In 1919 when Ottoman Empire was dismembered, Woodrow Wilson wanted Armenia and Kurdistan to be independent countries. It did not happen then. Armenia became independent in 1991. Kurds wait for their country.
Continuation of civil war will affect oil supply. Price of oil will go up and adversely affect India.
Maharukh Inayet on To The Point, Headlines Today, asked about ISIS being equal to thousand Obamas. Barack Obama is confused with Osama Bin Laden. This has happened to many journalists. Report of ISIS having a plan to target Iraq and Indians being is not credible and seems intended to drag India into war against ISIS. India has ISI problem, not ISIS problem.

Train fare hike

Government decision to hike railway fare has hit many people hard. It is immaterial it was hidden in interim budget of UPA government. Now BJP is in power.
Railways Minister Sadananda Gowda said “I am merely implementing the decision taken by the previous government.” There was a circular on fare hike on 16/5/2014 which was later withdrawn. Arun Jaitley said “The Railway Minister has taken a difficult but a correct decision.”
People did not vote for BJP to implement the decision taken by the previous government. If railways were making losses why BJP members kept quiet about it during budget discussions? Dinesh Trivedi had proposed increase in railway fair. He had to quit because TMC leader Mamata Banerjee did not approve it. When his successor moved the amendment to do away with fare hike BJP did not oppose it. They did not talk of passenger safety and world class railway.
BJP promised good days. It seems a cruel joke. Prices of onion and other commodities have gone up. Train fare hike is a problem for commuters.
Long distance train fare increase is 14.2% and freight hike is 6.5%. Freight hike will result in other increase. For most people long distance train travel is once a year or so. Suburban train fare increase is 100% or more except for short distances. Commuters have to pay more than double fare.
It is one thing increase fare of long distance trains. Another thing is to increase suburban train fare. Cost of season ticket has more than doubled. For monthly passes charge is doubled from 15 single journeys to 30 single journeys. For card tickets the fare is up by 50% except for travel up to 4 km. Commuters who had to pay 280 rupees for second class monthly pass from Vasai Road to Churchgate will have to pay 645 rupees. For Andheri/Borivali/Bhayander rate has gone up from 190 rupees to 480 rupees. There is no good reason why train fare should be same from Andheri to Borivali to Bhayander. Many in Bombay and suburbs had voted for Modi. They are disappointed.
For most people long distance train travel is once a year or so. For them fare increase does not make much difference. For suburban train commuters, fare hike hits hard. The increase could have been done differently. For long distance it could have been double, for season tickets less than 50%.
Government should find ways to increase revenue without increasing train fare. Various concessions like half fare to senior citizens can be done away with. Routes that are not profitable can be shut down. During railway budgets ministers announce new trains. Many trains are to please the people of constituency or state of the minister and cause losses.

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