Wednesday, May 11, 2016

749 (Part 4/100) of Indian Economic Enigmas. Will Reserve Bank of India follow Rice Standard?

This is in continuation of our blog post No. 734 (Part 3/100 of Indian Economic Enigmas), Click if you wish to study 734 (Part3/100). According to Government of India web page , India will be launching India gold coins, as a part of its gold monetisation program.

The website further states:-

"...The Indian Gold Coin is part of Indian Gold monetisation program. The coin will be the first ever national gold coin will have the national emblem of Ashok Chakra engraved on one side and the face of Mahatma Gandhi on the other side. Initially, the coins will be available in denominations of 5 and 10 grams. A 20 grams bar/bullion will also be available. The Indian Gold Coin is unique in many respects and will carry advanced anti-counterfeit features and tamper-proof packaging that will aid easy recycling. ..."


"...We are made of what we stand for. Made of truth and honesty. Made of what the Ashok Chakra symbolizes. Our rights but also our duties. Made of our sweat, but also of our aspirations and accomplishments. We are strength and endurance in equal measures. We are gold. Pure, strong and harbingers of a golden future.

Introducing Indian Gold Coin, the first ever national gold coin of India. Made of more than just gold, made of us. ..."

ybrao-a-donkey's humble comments. वैबीराव एक गधे के विनम्र राय . వైబీరావ్ గాడిద వినమ్ర వాణి. You have every right to differ with me. I respect your right. आपको मेरे मत से भिन्न राय रखने के संपूर्ण हक है। मै उस अधिकार को परिपूर्ण रूप से गौरव देता हुँ. మీకు, మీ భిన్నమైన అభిప్రాయాన్ని కలిగిఉండే సంపూర్ణ హక్కు ఉంది. దానిని ఎంతో నేను గౌరవిస్తాను. However, pl. examine this donkey's views also. परन्तु एस गधे के दृष्टिकोण को भी अनुशीलन कीजिये. కానీ ఈ గాడిద దృష్టికోణాన్ని కూడ ఓర చూపుతో కంటజూడుమీ, క్రీగంట జూడమీ.

What Gandhiji has got to do with gold? Or what gold has got to do with Gandhiji? Or what Akshaya tritIya has got to do with Gandhiji, though it may have something to do with gold ?

One of my most painful, daily pestering recurrent worries is, that Mr. Narendra Modi is wasting away, a beautiful unconditional mandate and opportunity he received from the people of India in the 2014 General Elections, to build a Great India.

It may be possible that Mr. Narendra Modi may rule India for another 35 years albeit with people's mandate, a la the Communist Party Marxist, which ruled the State of West Bengal. This is in addition to his 12 years rule of the State of Gujarat. But, yet, someday, he may have to step down either because people find some other better and vociferous sloganeer than him or because he has to meet his 100 years maximum span of human longevity. At the end of it, what? He may not leave anything which has TRUE INTRINSIC VALUE to the Nation.

This is because he is trying to OWN UP Mahatma Gandhi, just he has earlier tried to own up Sardar Vallabhai Patel, Netaji Subas Chandra Bose, Baba Saheb Ambedkar. Slogans and Tokens alone, without following at least one of the precepts of Great Men, will only become hollow hypocracies. At the particular moments of their usage, slogans and tokens may glow and sound flamboyantly and pompously like fireworks. But they do not make any lasting marks on the Nation.

Mr. Modi ought to have recalled Mahatma Gandhi's famous talisman quote:-

"...I will give you a talisman. Whenever you are in doubt, or when the self becomes too much with you, apply the following test. Recall the face of the poorest and the weakest man [woman] whom you may have seen, and ask yourself, if the step you contemplate is going to be of any use to him [her]. Will he [she] gain anything by it? Will it restore him [her] to a control over his [her] own life and destiny? In other words, will it lead to swaraj [freedom] for the hungry and spiritually starving millions? ...
Then you will find your doubts and your self melt away. ..."

Except during election campaigns, Mr. Modi may not have time to visualise the face of the poorest and the weakest Indians, because all his time and space is filled up with dresses, selfies with Corporate Giants, and Film Stars.

It is a wrong world-wide and nation-wide impression that Indians are enamoured of gold, or made of gold, or that Indians long to own pots of gold. This impression may be true in case of Indian Kings, Emperors, Priests and Traders, their Queens, Princesses and Wives. In the Indian history, the gold accumulated by Indian Kings, Emperors, Priests and Traders might have prompted and tempted the ilks of Mohammed Ghazni, Mohammed Ghori, Tymoor, Ahmed Shah Abdali, Robert Clive, Lord Dalhouse, Lord Wellesley to plunder India's gold, diamonds, and other precious stones.


But it must be noted that, they could not plunder the traits of inherent contentment, honesty, renunciation, staying away from evil -- of the common Indian folk.

In 1921 (circa) Gandhiji toured India, mobilising funds for the freedom movement. During his Campaign women attended his meetings and gave him away the gold ornaments on their body, as contribution to the freedom movement. One weakness of Indians, is they forget their history, and again fall into beaten tracks of temptations.

The recent trends of large scale purchases of Gold and diamonds in India, during the Valentine Day, during the Akshaya Tritiya day, seem to be the artificial demand creation by Monstrous Gold Merchants through advertisement and sales campaigns, using the services of film stars, paying them millions of bucks for endorsements.

It is true, that there is a custom of father of every bride (groom's father, depending on custom), purchasing a small gold marital thread, and a little jewellery to the bride.

Some Merchant castes seem to have misused this custom for EXHIBITIONISM of their ill-gotten wealth. Some unscrupulous politicians, bureaucrats, Corporate business tycoons, God persons, Temples, might have accumulated kilograms, quintals and tons of gold, by making money through questionable and ugly means. The Governments from time to time, instead of discouraging these trends, went on participating in, and taking pride in these acquisitions, as if all these things will add up to our Growth Rate.

Swami Vivekananda too spoke of kAmini-kAnchan sanyAs (English : Giving up women, gold - or staying away from women and gold). It is a different thing, that he himself did not adhere to his vow.

India does not need gold coins. This is because, India is facing spiralling inflation. Within few years, the price of the gold content in the gold coin will outweigh its face value. Then, the coins if hoarded will disappear from the market (anyway, of course, they are collection items only), or the coins will be melted and made into ornaments.

India has long back, dispensed with gold coins. Even the drivers of this world the USA-UK-France-Germany are not following the gold standard. IMF is not following its gold parity system actively. India's currency system is based on "Minimum Fiduciary Reserve". That means, RBI maintains a minimum quantum of gold and foreign exchange reserves. It goes on issuing currency notes or creating Bank Money called M3 with "sky as limit".

Though a currency note issued by Reserve Bank of India is a Demand Promissory Note payable to bearer, to pay the value of the Rupees printed on the Note, they themselves have removed the word 'demand' from the Note. This promise of RBI has never been tested either legally or physically by people. Since, there is no promise of paying in gold (gold standard), how the RBI will pay the presenter to it of the Note, in India? It will, at the most, issue a cheque on a Bank in India to pay the sum of Rs. ... to the presentor. But that Bank will have again to hand over a promissory Note issued by RBI, i.e. another currency note.

Suppose today (11th May 2016), I present a Rs. 10 Note to RBI, and ask it to pay me in the form of 1 kg. of Rice, which the Note used to fetch ten years back? Okay, the RBI has dispensed with gold standard, it will not pay gold. But, can't it pay RICE STANDARD? Can it guarantee to issue a packet of 200 gms. of rice in exchange for the Rupee 10 note?

Subject to corrections and deletions. A lot more is to be added. To continue. सशेष. ఇంకా ఉంది.


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