My Dad used to say that when he was a kid, money played a very small part in their lives. Luxury was a rarity, and its worth was realized by the dearth of it, not opulence. To him the greatest luxury was having a stick ice-cream, which cost 1 rupee back then. 1 rupee coins at that time used to have the jantar mantar architecture in a miniscule grandeur. For many years he recognized the jantar mantar as the sign of the Indian Rupee, he appreciated and coveted it, not because of its aesthetics, but because it meant a strawberry flavoured stick ice cream to him. He hated Vanilla!
Dad’s story was still lingering in my head when I suddenly remembered the symbol and its ramifications recently, when the Indian government announced the new symbol of rupee amidst much fanfare. The symbol which amalgamates the English ‘R’ with the devnagari script ‘R’ is indeed a simplistic beauty, and I congratulate D. Udaya Kumar who designed it. But what really stumped me were the claims being made about the importance of the symbol. According to government sources, and numerous news items that copy paste press releases, the adoption of the new symbol signifies that India has joint the elite club of currencies like the US dollar, the British Pound and the Japanese Yen. This symbol gives us a unique identity and character and highlights the strength and robustness of the Indian economy. This will separate the Indian rupee from the wannabes like Indonesian Rupiah, or even the Pakistani Rupee. It kind of distinguishes the true rupee, and shows all who the boss is! With the adoption of this symbol, the Indian rupee will be recognized at par with the other major international currencies mentioned above a month of the release of the new symbol. I still do not understand how it is going to achieve all that!
Let us start by analyzing the claims. If giving a new symbol to the India rupee is supposed to bring it at par with the US $, British £ or Japanese ¥, it should have done the same to Costa Rica’s ₡ (Colon), Israeli’s ₪ (New Shekels), Vietnam’s ₫ (Dong) etc. etc. to tell you the truth the list is quite large. Just google ‘Currency symbols’ and you will find a good list of symbols that are not as recognized as the US $ or UK £. How many of us actually knew such symbols existed?
A look at the list brings forth another interesting fact. Dollar as a currency is not unique to the US. The Australian currency is called Dollar, so are the currencies of Canada and even Brunei Darussalam! Not only do all these Dollars use $ symbol, even the Pesos used in Argentina, Chile or Cambodia use the same $ sign! Ditto for the Pound, with Egypt, Gibraltar and Guernsey use Pound along with the symbol! I frankly do not see why the Indian Rupee faces such severe identity crisis from its Pakistani or Indonesian cousins.
What is more baffling is the notion that adopting this symbol will give the Indian currency a stronger global identity. Any currency is worth only its value. The worth of the currency lies in what it can buy, and not its aesthetics merits (numismatics will of course differ). The US $ or the British £ are more famous simply because of the importance they have in global trade. The $ obviously is not just US currency but a currency in which the most precious global commodity, petroleum, is traded. Surely you have heard of the term Petro-Dollar. With current US hegemony over West Asian oil and natural gas field, the rule of $ is ensured for some decades. The British £ is a historically important currency. The British empire at one time spanned the globe, and the use of British currency is a well established practice. The London metal exchange is still the global hub of all major metal trading in the world. The Indian rupee does not hold hegemony over any commodity in the world, nor is it used for transactions anywhere outside our sovereign domain.
Another important factor for the global acceptance of these currencies is that they allow convertibility of the same. You can hold Dollar or Pound and redeem it any time, anytime, anywhere. You can also trade these currencies, as the economies governing these currencies allow convertibility. The same goes for the Japanese Yen as well. We in India do not allow capital account convertibility and quite frankly it is too scary to be allowed. Even the IMF post financial crisis has shifted from its blanket prescription of suggesting convertibility and now accepts that full convertibility is a very risky proposition. Not all economies can handle the risk of full convertibility, and less so any developing country.
GLOBAL HUB! HOW?
This brings us to the next big question: Are we really as big a global economy as we are claiming to be? The recent hullabaloo about Chindia being the next global hub; our recent promotion to the G20 group etc. have all added to a false sense of bravado. We are still a developing country (our inclusion into the G20 along with Brazil was part of expanding the G10 to accommodate newer emerging developing countries, we did not join the elite group as a member as elite as others). Even our stock market, the cynosure of India shining, is heavily dependant on FDI and FII for its buoyancy. The outflow of foreign investors during the global financial crisis crashed the Sensex, and gave many a heart attack. We are still trying to woo foreign investors to come back and re position the Sensex to its lost glory. Our outcome of such development is that we measure our wealth in terms of our foreign exchange reserves, which ironically is in US Dollar. For a country that measures its wealth in terms of foreign Dollars, trying to pose its own currency as a Global is nothing more than a joke!
We are not the only country to hold national wealth in foreign currency. China has invested so much of its national saving in US treasury bonds that it can cause the US Dollar to crash! The Chinese control their currency strongly, do not allow convertibility, and trade quite happily in US Dollars (even though they are the biggest global manufacturer across sectors). They are a global economic power today irrespective of the symbol of their currency, and de facto control the fate of one of the world’s strongest currency, even if its not their own. That to me is real economic power!
So what does the new symbol of the Indian Rupee really signify economically?