View Point…$$ Green Money $$
Green money!!
There is lot of talk about the rupee strengthening and the dollar loosing its shine. I’ am certainly not into economics. As a lay person, the following is my way of looking at things. Pls feel free to discuss. The dollar is magic. The dollar has the purchasing power. This country runs on consumerism. India is still in the infancy stages of consumerism. From my understanding, the rupee is strengthening against the dollar, but value of rupee wrt to purchasing power is reducing. (correct me if iam wrong)Take for example, a person gets about 3000 $ in hand per month. In U.S, one can get used color TV 20’’ for about 30$ to 40 $. Rent is about 700$ (one bedroom appt). Utility bills will add 100$ per month. Food would be max 300 to 400 $ per month. New TV would cost about 300 $. New laptop would cost about 1000$. But used laptop would be available for <100$ also. Used dinning table 50$ to 100 $. Used good condition Sofa set, 40$. Used micro wave for 20$, etc…
Now, to realize the dollar is magic, think that a person in India earns about 3000 Rs per month, and convert all the above prices to rupees. You would realize the cost of living is actually cheap.. and the power of the dollar. Btw, I bought my used car, Nissan Sentra, 2002 model for 5800$. Think one can get the same in India for 5800 rupees and an average person earns 3000 rupees per month.
So wot are your views?????
The work done to earn $3000 in US will at least earn Rs. 20,000 in India (you just have to see the dollar compensations of software engineers sent onsite and arrive at this conclusion). So the above comparison is not entirely right.
If you are comparing average salaries and purchasing power of individuals, then you are comparing just that and not the purchasing power of rupee. Also there are several reasons why dollar is still as strong as it is.. including manipulation of dollar value by the US Fed with the help of Oil exchanges. There is no collateral the Fed has to back the dollars it is printing – no gold, no crude, no Forex reserves, no other foreign assets nothing. In simple words, dollar has value because there is demand for it outside US and the US consumer is making hay while the sun shines.
Appreciation in the value of the Rupee doesn’t mean that it is equalling to the power of the Dollar…to be more specific there are various other factors which needs to be accounted…for example i am taking the inflation rate…its an untold truth that in order for the economy to be in control its inflation rate should be between 4 – 4.5% but when you take the current inflation rate in India, oh no, it has crossed 5.5%…which indicates the economy is not under control…CPI (Consumer Price Index) and inflation rate are directly proportionate to each other and hence CPI is also growing to greater heights…and the GDP of the US and India are also not in the same range…so the verdict is not to measure the strength based on the appreciation of the Rupee value but to measure after considering the above criteria into consideration…
@ Roopesh / Viji,
Thanks for your thoughts. I guess, I would have to read more and learn more before I could understand your views. My thoughts were that of a common mans’. Would be nice if anyone can give a very simple example for understanding the value of the Rupee / Dollar.
Mani, ur views look pretty impressive when we take the things from mathematical point of view. But Economics is a bit tricky issue.
Let us not map 1$=1Re (because associated things are not so simple)..Instead let us take 40 Rs (actual scenario). Now a guy getting 3000$ at US would get 1,20,000 Rs/ month here. If he gets such a huge salary here..then he would never buy used items..he can lead a royal life in India..irrespective of cities.
He would not stay at 1 BHK apartment on rent rather he would prefer bunglow..He would be buying the latest model car, laptop, Sofa, oven from the show room. Means actually person would be spending more on brand new items…this implies his spending is more when compared to his counter part at US right? And all his transactions are in Rs. Means purchasing power is not decided (to maximum extent) by the currency but depends on the financial status of the person who is spending…(He can do so as he is in the other territory)
What I understood from ur statement is that, used items really do not have value at US. But here it is not the case..10000Rs Colour TV fetches 2-3 thousands after some years(unlike 10% in US). Means the product sold still has some value…means buyer need to pay more for purchasing the used item…
Really a good comparision. but this is my opnion. A talented person like you can earn atleast 30k in India compared to 3000$.
now compare in ur way. that comes upto 1000 = 1$. TV 20′ for 30-40$
trust me we get it in india for 3k-4k.. 7000 one bhk, yes we will get it here, and so on compare.. may be it might be true what you have told above but trust me INDIA is no more remains a nation of billion people selling cheap labour and raw materials and providing a large market for goods and services to other nation(except in IT industry). So we are expecting you back home and doing something great for this country