I asked my mother, “what would you buy in 100 rupees?”, she replied “a kg of rice, half kg dal and some vegetables. Had it been the old days, I could have bought a good shirt-pant for you and a beautiful saree for your wife in the same amount, Beta! “
Well, I can buy all those things, which she says right now in 100 Euros for sure. So how does it work? Is it just the conversion rate of currency or something more than that…
Suppose you can buy 1 kg rice in 50 rupees, and say one can buy it in Europe for 2 Euros = 120 rupees (assuming 1 Euro=60 rupees). So rupees 50 + 70 (the cost of transportation + custom and taxes etc.) Now after 1 year, the value of rupee falls to 1Euro = 65 rupees. Now 2 Euros would be equal to 130 rupees. So a seller in India would make 10 rupees more in selling rice to me for 2 Euros [130 – (50+70) = 10]. So he should sell all rice to me or else you should pay more. Hence the price must be increased to 60 rupees/kg from last year 50/kg.
Now this is not as straight as it is written above, but doesn’t this sound logical. The basis for this is falling rupee. And why does the rupee fall? – A million dollar question, not easy to answer. But there is a straight relation to the deficit in the union budget. If the deficit increases, the rupee falls for sure(many other factors are needed to keep it right). And what is this deficit, the Govt. of India spends more than it earns. So what does it spend on – roads, security, healthcare, alleviation of poverty… or politicians, mismanagement of govt. expenses, covering stealth by govt. servants…..
Would the govt. please check its spending? All of us get scolding when we do spend more than we earn, and all the govt. globally are facing it, why is the Indian govt. not? How long should common man pay for Govt. and let them loot his hard earned money in the name of spending on progress?
