UPA - A total failed house of Commie-congi opportunistic Alliance

Source-C J Chandru-merinews

THE UNITED Progressive Alliance (UPA) government headed by our Prime Minister Manmohan Singh has the most efficient team members with it. The prominent ones are P Chidambaram, YV Reddy and Montek Singh Ahluwalia. They are the dream team a PM can ever aspire to get. This is over and above his experience of having held the post of governor of Reserve Bank of India (RBI). So if everything is so good, then why is the officially declared inflation nearing double digits despite all these geniuses around? The answer is vote bank politics.

The UPA government is artificially trying to keep the rupee down. When inflows of dollars into India exceed outflows, then our currency has to appreciate. But RBI is printing new money out of thin air and buying the excess dollars so that the rupee does not appreciate. Over and above, when the international prices of commodities increase in dollar terms due to dollar devaluation, our government has two options if it wants to tackle the inflationary expectations genuinely.

Option one: Allow our currency to appreciate so that our existing price of commodities does not increase. This can be explained by the following example. Crude oil was being sold at 100 dollars in February. The equivalent cost in rupee terms at Rs 39 per dollar was Rs 3900 then. Our forex reserves were 298 billion dollars then. Crude oil is costing 130 dollars in mid June now. To maintain the price of crude oil at the same Rs 3900 per barrel, our government could have asked RBI to sell some dollars (around 40 billion dollars is more than enough for that) and maintain the rupee at Rs 30 per dollar resulting in the same price for crude as in February instead of 130X43 = Rs5590 now.
Option two: If the RBI feared that the dollar would crash in international markets if the news spread that India is selling away the dollars, then India could impose blanket ban on all non essential imports other than that of crude oil or at least ban import of goods, which are available locally so that we could have a trade surplus and without RBI intervention, the rupee would appreciate and nullify the price increase in dollar terms.

I am writing this with a bleeding heart. The geniuses of UPA whom we trusted so much and believed to be the leaders, who would lead India to become a developed nation, have resorted to cheap vote bank politics. If a common man like me can understand the way to tackle inflation then it is no exaggeration to say that these people are aware of the possibility of combating inflation efficiently. The UPA government believes that high employment rate in software industry with inflated wages would vote them back to power. For that single reason they are doing the exactly opposite thing by banning our steel and food exports despite our record bumper food harvest, resulting in widening trade deficit and rupee depreciation.

But poor UPA, you should be the dumbest insane people on earth if you have not learnt the lesson from Karnataka elections. The software industry is also not happy with the current rate of inflation. If you do not act now then we, the voters, may have to ensure that you don’t get a chance of having to act in the future.