Torture of the rupee: Between a red queen, yuvraj and white veshti

Vivek Kaul
A day after the Independence Day, the Queen’s durbar was in session.
To her left sat 
mauni baba with his head down and his eyes looking at his feet.
To her right sat the 
yuvraaj, the man who refused to grow up, fiddling with his new Apple iPhone.
Standing in front of her was the man who always wore the white 
“So why is your veshti not spotlessly white today,” asked the Queen as she started the proceedings for the day.
“Oh, yesterday the wife decided to host an Independence day lunch and asked me to get two kgs of onions,” replied the man who always wore the white 
veshti, rather matter of factly.
“So?” asked the queen.
“Well, after buying two kgs of onion, I did not have enough money left to buy a Surf Excel sachet. You know, to wash one 
veshti properly takes one sachet.”
Oh. I don’t know what this Power Man is upto. He doesn’t seem to understand that many elections have been lost on the price of onions,” lamented the queen.
“Yes madam,” replied the man who always wore the white 
veshti. “But he will win only if the onion prices keep going up.”
Anyway so tell me what are we going about the rupee?” asked the Queen. “I gather this morning it even touched 61.97 to a dollar.”
“Rupee, rupee, rupee,” the 
yuvraaj said before the man who always wore the white veshti could say anything. “Robert keeps talking about them all the time.”
“Shh! Shutup,” said the queen. “Ah. I so wish that my son had married and my daughter had not.”
“Madam we are doing a lot of things to stop the fall of the rupee.”
“Like what?”
“On Wednesday I got the Reserve Bank to put in capital controls.”
“Capital controls”
“Yeah. Like Indian citizens can no longer buy property abroad.”
“That’s good. Anyway there is so much land in the country, why do they need to buy property abroad,” replied the queen. “They can always buy land in Gurgaon.”
“Like Robert, like Robert,” the 
yuvraaj interrupted again.
The man who always wore the white 
veshti ignored the interruption and carried on with his explanations.
We also slashed the amount of money Indian citizens can remit abroad every year to $75,000, from the earlier $200,000. We have raised the import duty on gold and silver to 10%. We have also made it more difficult for Indian companies to invest abroad. All this to make sure that the demand for dollars goes down and the rupee recovers.”
But it doesn’t seem to be helping,” said the queen. “Does it?”
“You know Ma, what this reminds me of?” the 
yuvraaj got into the conversation again.
beta?” asked the Queen lovingly.
I recently read this lovely book called Through the Looking Glass, written by Lewis Carrol.”
beta. You should read more instead of fidgeting around with that phone of yours all day long.”
“And the book had a Queen.”
Really? Like me?”
“Yes, the Red Queen. And there is something that she says in the book that makes immense sense.”
“And what is that 
As the lines from the book go: “”A slow sort of country!” said the (Red) Queen. “Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!“”
“Ah, smart boy. Now I really know what is happening. We are not running fast enough. Also let the records of the meeting show that I said that. It’s such a smart thing to say.”
“Yes Madam. That’s what I have been trying to tell Subbu of the Reserve Bank,” said the man who always wore the white 
veshti, trying to save himself and pass on the blame.
“Call Subbu here at once,” roared the Queen.
“Yes Madam, in fact he is waiting outside,” said the man who always wore the white 
So within five minutes Subbu was brought in. He looked very happy with not a care in the world.
“So Mr Subbu will you care to explain why are we not running fast enough when it comes to preventing the rupee fall,” asked the Queen.
“Madam, to be honest, there is nothing much we can do. The solution to the crisis is very simple. We need to cut down on our oil imports, our coal imports, our edible oil imports and our fertilizer imports. And I guess you know what will happen if we do that? At the same time we need to increase our exports manifold. And that won’t happen unless the physical infrastructure is improved. We need better ports, better roads and a better rail network. All this is not going to happen overnight, given that it has not happened in years. Also, Indian companies have borrowed too much money in dollars and all that needs to be repaid now. The NRIs are also looking to withdraw all the money they had deposited with Indian banks,” came a long answer from Subbu till he was stopped by the 
In short we are screwed,” exclaimed the yuvraaj.
So the demand for dollars will continue. The rupee will continue to be under pressure. We cannot sell dollars to control the rupee fall because we have just enough dollars to cover around six and a half months of imports. And that is a very low level. So we can only run to keep in the same place. In fact, we may not be able to do even that,” said Subbu, very matter of factly.
“Oh. But you could still do something about it?” asked the Queen.
Madam, my time is up. I am going back to Telangana. I have bought a nice house in Nizamabad. And will spend the next few years watching the mythological movies of the late NT Rama Rao garu. It’s up to the Professor now,” said Subbu as he left the room.
“And why is the stock market down by more than 500 points this morning?” asked the ‘worried’ Queen again.
“Basically the foreign investors have now started to fear that we may not allow them to take their money back.”
“Oh, but why? I know of no such plans.”
“Madam, we have reduced the amount of money that Indians could remit abroad to $75,000 from $200,000. So the belief in the market is that our next step will be not allowing foreign investors to take their money back.”
“So they are selling out of the stock market, converting their rupees into dollars and taking their money back, before we do any such thing. A similar things seems to be happening in the bond market.”
“Ah. All seems to be going wrong for me,” lamented the Queen. “I had such great plans for the 
Que Sera, Sera (Whatever Will Be, Will Be),” played on yuvraaj’s iPhone as the Queen decided to call it a day.
And finally the 
mauni baba woke up and said something.
“When we don’t know where we are going the journey is the reward.”

The article originally appeared on on August 16, 2013
(Vivek Kaul is a writer. He tweets @kaul_vivek)