India heading for currency crisis?
It was sometime in the first half of the 1990s, when the then Finance Minister Dr Manmohan Singh was on a visit to the USA, that an American businessman had remarked, ‘We respect the Indian Prime Minister (P V Narasimha Rao) but we love the Indian Finance Minister (Dr Manmohan Singh).’
Cut to the year 2013.
Over the past few years the chief executive of the United States of America, President Barack Obama, whose job profile includes the protection and promotion of America’s foreign economic interests, has repeatedly gone out of his way to describe Dr Singh, now Prime Minister, as a ‘statesman’ and ‘one of the greatest world leaders’.
Obama and the American businessman refererred to earlier are not being over-generous to Dr Singh. They have more than enough reason to be satisfied with his performance. After all, it was during Dr Singh’s five-year stewardship of the Indian economy as Finance Minister that the rupee declined by over a hundred per cent to the US greenback — from about 17 per dollar in 1991 to around 35 for one unit of the American currency in 1996. Then again, as Prime Minister, he presided over the further and further erosion of our national currency from 43 against the dollar when he assumed office in 2004 to 60-61 this year.
In fact, on June 26 the rupee closed at 60.72 to the dollar. As a result of intervention by the Reserve Bank of India (RBI), the country’s central bank, the rupee rose in value in the last week of July. Apart from the RBI effect, positive (?) investor reaction to the Manmohan Singh government’s anti-people announcement that it would double natural gas prices from April 2014 and fast moving consumer goods (FMCG) MNC Unilever’s decision to buy up all outstanding shares in its Indian subsidiary Hindustan Unilever Ltd (HUL) also aided the rupee’s temporary rise.
However, after RBI Governor Duvvuri Subbarao unveiled a strongly pro-rupee, pro-India First Quarter Review of Monetary Policy last week, US-backed speculators and foreign institutional investors (FIIs) got back into action and resumed their attack on our nation’s currency. As a result, the rupee has again plunged below the 60 per dollar benchmark.
Just for the record, the Manmohan Singh Government has not offered another term at the helm of the RBI to Subbarao, who has served almost as a lone crusader taking on the US-led machinations against the Indian economy and people, and he will be stepping down on 4 September. In fact, in a curiously unusual move, Finance Minister P Chidambaram has publicly stated that Subbarao is not interested in another term and ‘wants to move on’.
And predictably, the Union Government is reportedly scrutinising the CVs of a wide range of candidates — all with proven pro-American credentials — to succeeed the MSc (Physics) gold-medalist from IIT (Kanpur) who also holds an MA and PhD in Economics.
Since April, the value of the rupee has depreciated by more than 10 per cent. The initial trigger for this steep depreciation in the value of the Indian currency was pulled by, yes, the United States of America. It was the remark by of US Federal Reserve Board Chairman Ben Bernanke that if economic conditions in America continue to improve, the Fed might decide to scale back its $85 billion-a-month quantitative easing (QE) programme from 2014.
Amazing isn’t it?<br><br>A mere statement made by an American policy shark can cause such terrible mayhem in the Indian foreign exchange markets. We couldn’t have clearer proof that, despite all the noises in the public space — particularly from the out and out anti-Indian Indian media — about the country being a rising superpower, our’s is hardly more than a banana republic run by an assorted collection of sharks among businessmen, politicians, bureaucrats, academics and journalists who are out to make personal gains by colluding with world’s sole superpower — the United States of America — against the interests of their motherland. <br>They have reduced the Indian economy to such a state that it is utterly, helplessly and dangerously (!) dependent on short-term fund flows from foreign speculators who are, in turn, dependent on the US Federal Reserve Board to keep providing ‘gambling funds for quick profits’.
A potent financial instrument available to the Reserve Bank of India to combat the US-led assault on the rupee is to raise domestic interest rates. But such a strategy involves the costly side-effect of curbing credit, which would in turn dampen the country’s overall level of economic activity. Given that the Indian economy is already suffering from a sharp slowdown due to which the growth rate plummeted to a decade-low 5 per cent in financial year 2012-13, such a road map has its problems.
However, if this is any consolation, the USA’s economic warfare is not targetted against India alone. Its ultimate aim is global American dominance and the targets include every country from tiny Honduras to mighty China. What varies from nation to nation is the degree and kind of resistance that America faces in its bid to subvert their sovereign economic interests
Thus, while the business and politcal elite of China and South Korea steadfastly defend their national economic sovereignty, the members of the Indian elite compete with each other to please their American (and British) masters. In the process, they end up turning the USA’s ‘frontline ally’ India into Uncle Sam’s ‘subordinate servant’.
Over the past month, there has been a widespread sell-off in Asian currency markets because of fears that the US Federal US Reserve Board may scale back the availability of dollar funds at near-zero interests some time next year. The rupee has been the worst performing major currency among these countries. Its value has been butchered not only against the US greenback but also against other key currencies like the 27-member European Union’s euro (which is used by 17 of the EU members), the British pound and the Japanese yen. The Reserve Bank of India has made several interventions in the foreign exchange market by selling dollars to defend the rupee in the face of the sustained attack from US-backed interests. The problem is — the RBI is simply not strong enough to mount a sustained defence of the nation’s sovereign economic interests.
The relentless financial war against our nation by the USA and its Indian collaborators has reduced our foreign exchange reserves to around $290 billion from an all-time high of $321 billion in 2011. This sum is hardly enough to pay for seven months’ imports — a sharp deterioration from the situation in 2008 when the RBI had enough reserves for 15 months’ imports. China, on the contrary, led by an independent and self-respecting government, has accumulated $3.2 trillion in foreign currency reserves.
Foreign institutional investors (FIIs), one of the weapons with which the USA undermines the economic sovereignty of other countries, sold a net $7 billion of Indian debt and equity in June, adding tremendously to the downward pressure on the rupee. <br>America has moblised another class of investors too — foreign direct investors — in the attack against India. In the 2012-13 financial year which ended on March 31, foreign direct investment (FDI) was down 38 per cent from the figure in the previous fiscal (2011-12).
Taking full advantage of this grim situation, the USA has deployed another component of its economic warfare arsenal — the big three rating agencies. Standard and Poor’s, Moody’s and Fitch Credit Rating Agency are now being used to put further pressure on India to completely open up for the undisturbed plunder of its resources and people.
S&P, Moody’s and Fitch have repeatedly threatened to downgrade India’s sovereign credit rating, which currently stands just a notch above ‘junk’ bond status. The global credit rating agencies have been placing relentless pressure on India to dramatically accelerate measures to reduce the government’s budget deficit and to remove all remaining barriers to foreign investment, both instututional and financial.
Imagine the Manmohan Singh Government’s response to this sustained attack on the Indian economy, capital markets and money markets by the USA and Great Britain. Union Finance Minister P Chidambaram, an alumnus of Harvard Business School from where the American establishment has trained its future assets in several countries, commented, ‘I could not agree more with Fitch when it said that more reforms are needed.’
He and his colleagues in the Union government have consistently been making public statements assuring the American establishment that the Government will accelerate, deepen and widen the pace of economic reforms, a euphemism for abject surrender to American companies, banks, speculators and other players. To give a cloak of respectability to this calculated process of selling off India’s interests to the USA and putting the lives and future of its 1.2 billion unfortunate inhabitants to ransom in foreign hands, the lackeys of the Americans in Indian academia take refuge in the word L-P-G (Liberalisation-Privatisation-Globalisation.)
What this actually means is Liberalisation of the country’s policies so that there remain no laws or rules to restrict the country’s economic drain by the Americans and their British ‘allies’,
Privatisation of all productive resources and assets and their sale to foreigners at throwaway prices, and Globalisation of India to leave it totally helpless at the hands of the Americans economic pirates and their Indian subordinate collaborators. <br>The latest news is really bad! The rupee ended last week by closing at a new record low of 61.10 per dollar on Friday August 2, 2013. India today stands at a grave juncture.