Be a Neo Swadeshi. The time is now.
Don’t do this. Nobody likes to be told so. Yet, there are times in History when we accept the calling and apply ourselves. Not doing something is not merely a form of dissent. It could also be a way of changing our destiny. Remember the swadeshi movement. It served as a strong economic deterrent against the British. Economic issues are central to the future of societies and Governance is all about how we move these policies beneficially for a better tomorrow. India has been under a policy stalemate for the past 3 years and economic policies have become static. The result is that we are not responding to the needs of our society which are highly dynamic. The greater worry is that we are doing nothing when we should be proactively doing a lot more. China, our neighborhood bully is doing a lot more and proactively so.
I would like to highlight one issue which is not merely a worry. It is something which is hurting our cost of living and will decisively hurt the future of our children. The issue is relating to the import of one commodity. We, as a Nation, spend Rs.2,50,000 crores every year at current prices. The pity is that most of this money comes out of foreign exchange. So, we spend 2,50,000 cr to buy dollars with which we buy this commodity. So our rupee depreciates with greater vigor. All our imports are costlier prices as that is the price we pay for a weaker rupee. We actually pay higher for everything we import. Business will not be really bothered about this. Exporting businesses like IT will actually welcome this as a weaker rupee gives them more rupee profits. Importing businesses struggle to pass on costs and mostly find solutions within their business. But, it is the householders who pay more for their petrol, more for their vegetables and groceries and more for everything. Inflation cant be kept down if the rupee is weakening. It spreads into every aspect of our lives. Interest rates are raised by RBI as it is the only available economic tool to tamper with in their war on inflation. This further hurts the middle class householder who carries an EMI. The householder bears the whole brunt of this assault.
So what is this rogue commodity that is kicking our rupee down? It is not oil. It is gold. Gold is taking away precious foreign exchange, weakening our rupee, raising our cost of living and virtually making our lives miserable. We are buying gold for a better tomorrow while ruining our saving power today. Is it not foolish to buy a commodity feverishly with all our savings and by doing so, hurt our very savings power? But, that is exactly what the Indian middle class is doing now. You may think that there is nothing new in what we are doing. We always bought gold. The trouble is that we are buying twice the amount of gold at twice the prices they were a few years back. This 4X effect is killing our FOREX. We are unknowingly fueling a speculation in the metal at a scale never seen before and this in turn is hurting the rupee. So what can we do now?
There is one thing the middle class householder can do. Actually, every Indian can do this. Don’t buy gold for a period of time till our rupee appreciates to a higher level. By not buying gold, we can actually do two things. We can save and use dollars for better and more important things. We will also see gold price drop significantly. Actually, they may even crash as we are the world’s most prominent buyer of the precious metal. If a products most important buyer stops buying, we all know what will be the impact on its price.
Rs.2,50,000 crores of forex will get freed up and the rupee will gallop upwards. This will drop our oil prices. Our petrol and diesel prices will reduce. Inflation will definitely come down to more acceptable levels as fuel costs are a major source of inflation. Money will be made available to our banks and this will lower our interest rates and also give us better returns. Gold after all has already appreciated a lot and the immediate future may give poorer returns. If the same money is lent to banks, we will see interest rates drop as banks will struggle to lend. Lower inflation and interest rates is what every middle class Indian wants. Yet, he is actually working against it by investing all his savings on gold. Infact, the import of gold is a major source of inflation as it hits the rupee hard and starts off a chain of consequences.
Is anyone listening?