Indian Rupee Where Does It Go From Here?

Indian Rupee Where Does It Go From Here?

In budget 2010-11 India’s Finance Minister Pranab Mukherjee wanted to formalize a symbol for the Indian Rupee (INR) to reflect and capture the Indian ethos and culture. With new symbol approved by the Indian government on July 15, the country has gone gaga over the selection of the symbol which is a fusion of Roman and Indian Devnagari script. However, the million dollar (rupee) question is will the Indian Rupee have pride of place along side the select club of currencies such as the US Dollar, British Pound Sterling, Euro and Japanese Yen that have a clear distinguishing identity and global presence? It does not seem so for a foreseeable future.

Some call it as a sign of India’s growing aspiration while critics say it is needless exuberance given the economic challenges the rising India faces. Several G 20 nations including all powerful China have not gone for the unique symbol since they want their currency to be globally relevant before taking such a step. India will not gain anything by internationalizing its currency symbol since there are virtually no takers for the Indian currency in the global market or even accept it as reserve currency. Moreover, unlike the US Dollar or Euro, Indian currency is not freely convertible. In fact, India itself does its trade and business mostly in US Dollars.

It is true that India’s near 9% growth rate makes it a nation to watch with admiration. However, given its rich and poor divide, high unemployment, huge budget deficit and high inflation, the country has long way to go. In fact, the UNDP study, ironically revealed two days ago before the Indian government approved the rupee symbol, pointed out that acute poverty prevails in eight Indian states, including Bihar, Uttar Pradesh and West Bengal (the most populated states) together accounting for more poor people than in the 26 poorest African nations combined. Given these bitter aspects, there is no use in having the new rupee symbol on computer key boards alone – this can be incorporated within no time - simply because India happens to be world’s software hub.

Gopal Sutar