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The Rupee ConundrumKarishma Jadeja

While the Reserve Bank of India, our Finance Minister, the politicians & economists et al arguetooth and nail about the best possible solution to the current rupee crisis, there is one solutionwhich beats them all. We need a divine intervention, quite literally!

We all know that the Rupee is falling and that it is not a good thing. As one popularnews channel put it, India has gone from being a breakout nation to a breakdownnation. Mukesh Ambani has become poorer by $5.6 billion since May 1 st and is nowdown to his last $17.5 billion. And everybody from the aam aadmi to the corporateconglomerates are screaming and shouting.

The Problem

Most experts on the subject have slightly varying reasons as to why the rupee is freefalling the way it is but here are the two big ones that are agreed upon by nearly all of

them.

1. The US economy has begun recovering as a result of which foreign investment inIndia is rapidly decreasing. Not to mention, an announcement by the US FederalReserve Chairman Ben Bernanke in August, stating a definite roll back on the FedsQuantitative Easing program sent ripples through emerging markets across theglobe.

For those unfamiliar with the term, Quantitative Easing is a monetary policywherein money supply in the economy is increased due to buying of financial assets(such as bonds and stocks) from private institutions and banks. The policy ensuresthat long-term interest rates stay relatively low, which in turn makes people borrowand spend more money thereby boosting the economy.

2. Apart from global factors, there are a bunch of domestic factors that have contributedto the Rupee slide, the most important one being the current account deficit.

A current account deficit or CAD occurs when a countrys net imports exceeds itsimports thus, making it a debtor to the rest of the world. Indias CAD peaked in thefiscal year 2012-2013 to $88.2 billion due to increased imports of commodities such asoil and gold. Increased demands for imported goods increased the demand forforeign currency thereby weakening the local currency, in this case the Rupee.

However, there is some hope that Indias CAD will be curbed to approximately $70billion in the fiscal year 2013-2014 owing to a slew of measures taken by thegovernment which includes curbing gold imports by increasing the import duty onthe precious yellow metal to 10%. This will provide much-needed relief to IndiasCAD, reducing it by $10-12 billion!

A divine solution?

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Now that we understand the problem a bit better, whats the solution?

In the words of our Commerce and Industry Minister, Anand Sharma, We must thinkout-of-the-box. And one such out-of-the-box idea proposed by market expert, JamalMecklai is for our Finance Minister and RBI governor to join hands (no pun intended)and go to Tirupati.

Per media reports, the Tirupati Temple Trust Foundation (TTTF) has over 1000 tons ofgold (although most folks peg this number to be closer to 2000), which constitutes about5% of all gold in India (30,000-35,000 tons). If we multiply Indias current gold reservesincluding that held by the TTTF, with the current value of a ton of gold i.e. $48.5 million,we get an amount somewhere to the tune of $1.6 trillion which would wipe away ourCAD instantaneously. However, no government will eversell all its gold reserves.

With that in mind, Mecklai proposed a solution wherein the FM and RBI governor couldoffer the Tirupati trustees a yearly interest rate of 2% (3,000 crores) on 500 tons of gold inaddition to providing a safe place (State Bank of India) to store the gold. With a 33.33%

ownership of the gold, the SBI could sell the remaining gold in the market which wouldreduce gold imports and in turn bring down our CAD. More importantly however, sucha step would send a positive signal to the market and strengthen the rupee to below 60to the dollar. Such would be the impact of one temple trust!

Whos the richest of them all?

Compiled below is a list of the 5 richest temples in India and their assets. It forces one tothink about whether a portion of this wealth (and this includes not just offerings of goldbut even items like milk and water) could indeed be used to benefit the nation as awhole or put to better use given that most of them engage in charitable activitiesindependently.

Temple Name Assets

Padmanabhaswamy (Kerala) Indias richest temple is home to treasuresworth Rs. 1.2 lakh crore and counting. Someof these include a 3 ft. gold idol ofMahavishnu studded with rubies andemeralds, gold coconut shells, a sack full ofdiamonds, and numerous gold coins datingback to the early 16th century. The templeand its assets are controlled by a trust run bythe Royal family of Travancore.

Tirumala Tirupathi Venkateshwara(Andhra Pradesh)

Dedicated to Lord Venkateshwara, a form ofLord Vishnu, the Tirupathi Balaji temple hasan annual income of Rs. 650 crore. Thetemple trust alone receives 350 kg of gold,500 kg of silver, and Rs. 300 crore indonations every year!

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Shirdi Saibaba (Maharashtra) The richest temple in Maharashtra receivedover Rs. 1000 crore in cash from its devoteesbetween 2008-2012. The annual revenue ofthe trust (Shri Sai Sansthan Shirdi) is Rs. 450crore.

Vaishno Devi (Jammu & Kashmir) Although this temple is 4th when evaluatedfor its riches, it is the second most visitedtemple in India after Tirupathi Balaji. With adaily income of Rs. 40 crore, the Shri MataVaishno Devi Shrine Board manages thetemple.

Siddhivinayak Mandir (Maharashtra) How often have we seen celebrities offertheir respects to Lord Ganesha at this shrine?Situated in the heart of Mumbai, the second-richest temple in Maharashtra receives Rs.

10-15 crore in donations every year and as of2009, had assets valued at Rs. 140 crore.

All is not lost

In an attempt to counter some of the overindulgent behavior practiced in places ofworship, an astrologer cum social activist by the name of Pandit Purushotam Gaur hasdeveloped water-harvesting infrastructure in approximately 300 temples in Jaipur torecharge the depleting groundwater levels of the city. This was after it was calculatedthat over 45 million litres of water gets wasted in the more than 3000 temples in the cityduring the holy month of Shravan!!

Bottom line

Offer me 1kg of gold and 5 litres of milk, said no God ever. While the idea of giving isnoble, it is the practice of excess that needs to be reflected upon. How do we justifyexcesses in a nation wherein obtaining 2 square meals a day is still a privilege for some?

Time for some self-introspection perhaps. Until then, Mr. Chidambaram and Mr. Rajan,may the Gods be with you.