WHY NOT DOLLAR SECURITY ORDINANCE--- instead of Food security--tejinder narang

EXCEPT that US Dollar (dollar) is “printed” and wheat/ an agro commodity is “grown” there is no difference in their pricing, storage, distribution and trading pattern. Dollar may be US’s currency but its availability and value is vital to all countries like any other food item. Just as production of grain is intimately linked to weather, dollar’s output is related to economic weather assessed in USA by Ben Bernanke. Its Quantity Easing (QE) is watched by buyers/sellers/hedge funds/speculators like the production data in each Quarter Ending (QE) given by International Grain Council (IGC London) and FAO.      

UPA may have considered issuing Dollar Security Ordinance (DSO), in preference to Food Security Ordinance (FSO) and made FCI responsible for its distribution under FSO. National Advisory council—nay, Non- accountable cabinet— may direct the PM to call an emergency cabinet meeting, endorse DSO and get it approved from the Parliament. BJP, DMK, SP and other parties will immediately endorse the bill as it would be superior to Chhattisgarh and Tamil Nadu model. Any discussion on FSO will then be irrelevant.

 Mr Shard Pawar’s Agriculture Ministry would be then be assigned the task to “ grow” (mean print) dollars in each Rabi and Kharif season of about 250-260 million tons (eq to our FX reserves) and two or three printing presses may be planned at nominal cost  to the high yield that they will provide. Production process will be isolated from the effect of Monsoon and weather. Can’t be a better creative idea!!

 Mr KV Thomas’s Food Ministry would have no difficulty in procuring 62 million tons of dollars—because they are already purchasing 52-55 million tons annually. (Incidentally, the recent dollar/rupee rates perfectly match the tonnage of grains currently procured and proposed to be inventoried under FSO). Every year, FCI and state agencies would procure million tons of dollars  and stock them in CAP—open air-- storages. Plans for building steel silos for “dollar stocking” can be advanced to 13^th five year plan.   Irrespective of the average cost of Rs 60 per dollar, the ordinance would  entitle  the targeted beneficiaries –about 800 million –of Indian population the right to receive good/bad/soiled currency Rs. 3/2/1 per kg. If they do not, they can seek their entitlements through the judicial system by spending rupees.

Rate of exchange would plummet to Rs 15-16 per dollar, because of inherent arbitrage of inter mediation of heist system. Rupee at 16 from 60 will be down by 75%. Day to day market intervention by RBI will not be required. Dr. Subba Rao, Governor RBI can retire peacefully, having firmed the rupee without changing the interest rates and without taking any positive action for last two years. This will also provide much needed relief to all –PM, Finance Minister, Commerce minister. Gold import can then be freely allowed and CAD will be in positive territory. Exports will no longer be a priority and domestic prices will fall in rupees due to surpluses available in the country.

Controversies between Sen and Bhagwati on social development and growth models will end—because dollar distribution will ensure all inclusive prosperity and people will  be able to make choices for health care, sanitation, education, travel abroad etc.  Conditional cash transfer scheme will be automatically applicable. India’s emphasis will be on monetary policy for societal growth instead of price policy. Economics will be right politically and socially.

With surfeit of dollar savings, industrial activity will revive. FDI can be re-named as Domestic Direct Investment (DDI). Indian saving will grow in dollars and foreigners will be taking FX loans from our banking system at negative interest rates, investing cheap funds abroad as “carry trade” for higher returns. Perhaps even China may buy Indian Dollar Bonds as such financial instruments will be guaranteed by “Gone for India”—sorry Govt of India-- for payment on maturity.  Indian printing presses will be working faster than US machines because we have higher productivity in population. USA Federal Reserve will also be taking advice of FCI in managing the dollar inflows.

USA may raise issue at UN or WTO for hijacking their currency. But none can question India’s sovereign right to remove poverty and exploitation of the poor by the hegemony of USA. We will get full support of EU(PIGS—Cyprus), NAM, African, Middle East and Latin American nations who are facing spectre of financial instability and feeling the “spring” of liberation in their hearts due collapse of their financial and banking structure. Possibly other nations will find ways and means to find the “secret” of DSO. Advisory services of NAC will be called for and Jean Dre’ze , NC Saxena, KV Thomas will be sent as consultants to needy nations who wish mend their food security.

Yes, what about the farm production in India, when all farmers will be flush with dollars? Nobody will be producing grains and other edible items. India can then import agro commodities from Russia, Ukraine , USA, EU, Latin America—while Indian farmers will sell their plots to land developers for Industrial and residential users. Cost of housing and living will fall and there will be Diwali of prosperity. Our ports and railways will be busy handling imported cargos.

There is an immediate need to revisit the FSO in the interest of “passion for compassion” and convert into DSO. FM and his Masters fully support this noble cause.