Saturday, February 21, 2009

macro level crores,micro level small change dissappearing

According to a recent Credit Suisse report some time back, Indian GDP at the current price level of the rupee (Rs 40.76 per $) stood at $1trillion. India is set to join the $ 1 trillion club.
At the micro level the disappearing small change is the Achilles’ heel of the Indian economy.Formerly, there were 64 pice in the Rupee.In the changeover to the Metric System, Re.1 = 100 paisa.Therefore, Re.1 = 64 pice =Re.1.36 paisa.In the British India days, a chicken dish on the Frontier Mail dining car cost 6annas, 3 pice, and 2pies.Formerly, there were 64 pice in the Rupee.In the changeover to the Metric System, Re.1 = 100 paisa.Therefore, Re.1 = 64 pice =Re.1.36 paisa.Today, there is no value for the small coins. The largest denomination coin is the bottom of acceptable currency.Super malls print bills 'rounding off' the small coins. Contractors and architects submit tenders, quoting Rs.5000.25paise per square foot. Beggars delight in this practice .They refuse to accept low denomination coins, saying it is time consuming & wastage of their labor. Change is tendered back to the traders for a 10% -30% commission.Hardware dealers buy in 'Metric' and sell in 'British.’ A ton of nails bought in metric system sells at Rs.2 per dozen, British system!
The time worn adage,' Take care of the pennies, and the pounds will take care of themselves has never been more relevant.
Further, at the macro level, the recent ‘notes-for –votes’ and payment for political electoral nominations along with the Satyam scandal is the tip of the massive black money iceberg. Can our economy survive this Titanic disaster?None of our economic experts bother to touch on this aspect.The time worn adage,' Take care of the pennies, and the pounds will take care of themselves has never been more relevant.Despite many Indians practically following Warren Buffet’s ‘simple living, High thinking lifestyle, there is no light at the end of the tunnel. Can our economy survive this Titanic disaster?Regards, Denis

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