Dr Subramanian Swamy is blessed with an intellect that is sharper than his age and has a wit that is trained to take jibes at opposition members. It used to be Congress-I most of his career and now in his new hat at BJP, he shows an unrelenting fervor to diatribe against the misdeeds of the UPA-I and II government.
I showed up at 10.30 am at Public Gardens for Dr.Swamy's speech but for a change he chose to be unpunctual or atleast the organisers of BJP have miscommunicated the time of starting. It started at 11.15 am or so.
The topic of the talk today was "The Decline of the Rupee under UPA-II". Quite a heady topic and a relevant topic. He divided his speech into four parts - First part covered the fall of the Indian Rupee (INR) against the US Dollar (USD or Dollar) all through the Congress years. Second Part covered the main reasons for the fall of the Rupee. Third part covered the blatant corruption that has grown under Congress regime. The last part was focusing on whether Indians should live on hope and what we should learn from these misdeeds.
First Part
Dr.Swamy was clear that the present decline of the Rupee was not isolated to the current regime of the UPA, it started right after Independence of India because of the lopsided model adopted by Nehru as Prime Minister. Nehru suggested we follow the soviet model of industrialisation, but the Soviet model was suited for a different country - it meant agricultural resources being harnessed from agriculture and funnelled into heavy-duty industrialisation. But the Indian adaptation was inadequate - most of the resources were already depleted by the British and hence it proved a faulty model right from the start. Soon, the industrialisation turned into a slow process and within few years after Independence, in 1957 or so, Dr Swamy said Nehru fixed the exchange rate of INR at 4.50 to a dollar. It declined rapidly ever since.
It declined further during Indira Gandhi regime and improved once during Morarji Desai's rule when INR appreciated from 8.75 under Indira's regime to 7.75 to a dollar. All along we have had fixed exchange rate. The situation deteriorated all through the seventies and eighties even under Rajiv Gandhi government. The only other time that the Rupee appreciated was during PV Narasimha Rao's regime. Dr.Swamy quipped that the choice of PVNR was itself an improbable one in the 90s in the aftermath of the assassination of Rajiv Gandhi; Rahul and Priyanka were too young and Sonia wanted to keep someone who is bound to go in six months. Dr Swamy pointed that much to her chagrin, Sonia Gandhi found that PVNR was getting hale and hearty after getting the Prime Ministership. PVNR is indeed the real architect of the reforms as he appointed Dr Manmohan Singh as the FM and several other talents in the ministry of improved sentiments. At one moment, Sonia Gandhi was getting so frustrated with PVNR's rising stature and statesmanship that she even asked him to announce resignation from President post of the Party. PVNR said it is well within the precedents of the Congress Party since the times of Nehru and Indira for PM to also hold the Party post of Presidentship. That was when Sonia's aides engineered the split in the party, the Tiwari Congress to weaken PVNR's hold. Dr Swamy also forgot to mention the famous Harshad Mehta scam in which PVNR was falsely implicated. Dr Swamy said that the way PV Narasimha Rao was treated is the shabbiest chapter in Indian politics; he has given one of the best administration and set the base for India's liberal reforms forever. For all that, PVNR became a footnote and a pawn in party politics. Dr Swamy assured the audience that whenever the next non-Congress government is formed, they will like to award Bharat Ratna to PV Narasimha Rao for his stellar contribution to the country. By contrast, Mr Singh is like the "Sing" in circus which dances to the tunes of the Ring-master who is Soniaji, said Dr Swamy. He once asked Dr Manmohan Singh what is the meaning of 2G. Dr Singh said it is nothing but Rahulji and Soniaji. Back to currency rates, when BJP ruled later under Vajpayee, INR touched 41.31 but depreciated a mere Rs.4.50 to a dollar, thats about ten percent.
Second Part
Talking about the current decline of the Rupee, Dr.Swamy said it is no surprise that it has depreciated more than 25 per cent in the last few months and it is a combination of atleast three or four factors, which will be enumerated later. Dr Swamy emphasised an opinion that by the end of September, INR will touch 75 to a dollar because of a vortex of complex factors at work which were always initiated during UPA rule. He said Currency Rates are a function of demand and supply. The higher the supply of dollars, the lower will be the dollar to a rupee and vice-versa. Hence, in today's scenario, rupee is plummeting against the dollar because there are more rupees in the system than the dollars and we are all importing mostly useless items which are not made in India.
First reason according to Dr Swamy is the price paid for telecom scams. Because most the Indian players who won the bids paid huge money to their foreign companies like Swann Telecom, Docomo etc.for the licenses, and the stakes are all split between the culprits all the way from Raja to Soniaji, Dr Swamy said the current exchange rates are favoring payment of royalties/ payments/considerations for the foreign companies in dollars which is creating a huge demand for them as against Rupee payments. Similarly, there are scams in Coal, etc. which is creating a huge vacuum in the country in terms of credibility and huge question marks on the government's role in corruption.
Second reason is the commonly debated point, of late, that rupee is hitting new lows because of the need to wire back the Swiss Account money of politicians close to Rs.70 lakh crores sitting outside India which is coming back to India at these high levels of exchange rates. Contrary to normal practice, Dr Swamy says the Swiss Banks actually charge service fees on the accounts held by Indians, they don't pay interest to the account holders as it is all unaccounted money. So, it is actually a jackpot for Swiss Banks to charge atleast 2 per cent service fees and then invest the money in USD Treasurys fetching 4 per cent yield, earning a whopping 6 per cent return in dollar terms. So, the UPA government politicians feel it is better for this money to come back to India rather than sitting idle in Swiss Bank Accounts. Hence, another case for a massive Rupee depreciation. Dr Swamy says, even the Finance Minister Chidamabram has a list of all the Hawala Agents in the country who are facilitating this massive trade right now at these elevated levels of exchange rates.
Third Reason, according to Dr Swamy for the Rupee Depreciation is P-Notes, Participatory Notes. Only Indian Passport holders, he says, avail of these instruments. An example of how this works, he says, goes like this. An Indian walks into a branch of Fidelity, Morgan Stanley or GoldmanSachs in a New York office, produces his Indian passport office and then gives them a stash of cash. Against this pile of money which is usually black money in Rupees, the firm will start trading on the client's account, kept confidential, in the Indian stock markets, sometimes over-trading but mostly generating more cash through legal channels of portfolio investments. Dr Swamy says, the rule is simple: pay in Rupees, get back in dollars. Another reason why demand for dollars will shoot up. Dr Swamy said P-Notes are the worst instrument available for creating unstability in Indian financial markets. He said even the Tarapore Committee has recommended for abolition of PNotes for the damaging effects on the stock market cycles but the government doesn't care. He also said Mr MK Narayanan, the National Security Advisor also was of the view that P-Notes are dangerous for India but the UPA Government is behind this P-Note business, he says and hence are unable to abolish them. He said many of the Indian companies have offices in Mauritius, in the same street, in the same building, in the same block, in the same room, which is usually locked up - which is creating funnels for money coming back through P-Notes. The Government and the FM are aware of this but do not raise an eyebrow to stem the rot. P-notes are one reason the Government has destroyed genuine stock market cycles for wealth creation. Today, the Middle classes have left the stock market because of negative returns. P-notes are the only reason, he says, that Indian Passports are relevant for participation in them.
The last reason, as per Dr Swamy, is the massive punting - aggressive short-selling by Mr Karthik Chidambaram, son of FM Chidambaram in a nexus of operations in Dubai and Singapore on the Rupee at levels above 75 to a dollar, which means, if Rupee appreciates, he will get wiped out of the short-selling and derivative trades. Dr Swamy said that the son of FM has gone so aggressive on these trades outside India sitting on the fringes of Singapore and Dubai that the shorts have become too strong for any recover of Rupee against the Dollar. Dr Swamy said all it takes to wipe this speculator son out of bounds is to allow RBI to pump in about $ 20 Billion to kill the speculators. He said RBI can easily manage to quell this trade out of its Forex kitty of $ 277 billion but the Government of India is not allowing because of FM Chidambaram. Instead of doing this, the FM and the PM are talking about time-pass measures like laying hands on the Tirupati Gold or Anant Padmanabhaswamy temple gold etc. Dr Swamy said we all know what happened to the government when they tried to tinker with RamSethu bridge. He said that considering the coal scam is itself Rs.4 lakh crores and our total tax receipts is in the range of Rs.4.5 lakh crores, there is no need for levy on Temple Gold reserves etc. and we needn't even levy any taxes because the Swiss kitty is itself Rs.70 lakh crores. Back to the Rupee, Dr Swamy said if the RBI is allowed to intervene with just $20 Billion out of its Forex Reserves, the trades of Karthik Chidambaram will end, and INR may even touch 50 again.
Against the backdrop of so many scams, Dr Swamy says people like Kapil Sibal still say there is zero corruption in telecom scam or anything. We should believe him, Dr Swamy said, because Kapil Sibal cannot count anything beyond zero! Talking about Chidamaram, Dr Swam said he is the most corrupt man in the country, probably next to only the Italian Matha. Not just that the FM is allowing his own son to punt on the national currency on short-selling spree but Chidambaram is the biggest culprit on many other issues and scams. Dr Swamy said he was happy with the stance taken by RBI Governor in his farewell speech blaming the fault lay with the government measures not with what the RBI has done so far. Dr Swamy said he has tried so many ways in which to legally prosecute Chidambaram for his follies but he has been escaping all of them because he is also a lawyer. But he said, there are enough time-bombs planted by Dr Swamy to bring Chidambaram to justice. He said, sooner or later, he will get the FM to the jail as even Raja has not escaped in the past. Dr Swamy said that the Cook of Tihar jail was complaining that he can prepare only Aloo Puri but ever since so many Madrasis have been transferred to Tihar jail, he is forced to cook more of Masala Dosa, Idly and so on instead of his staple fare. Dr Swamy said he has advised the cook to learn some Italian Pizza also just in case...!
Third Part
Having delineated the reasons for the decline of the Rupee and giving the backdrop of UPA's colossal failures, he said the reason for the unprecedented corruption in the country is the greed of the politicians and the greed of the people. He recalled that when he attended the Harvard University, one of the professors asked him about Mahatma Gandhi - that he wore so less clothes. Dr Swamy said that is the civilization of India -because here the virtue lies in renouncing everything and sacrificing your luxuries. He pointed out that, compared to Indians, Americans in particular and Westerners in general gave too much importance to luxuries and dressing sense and minor points. He said if you look at the Pope, he is dressed in so much opulence unlike others in India. Dr Swamy recalled that once in a famous presidential debate between Nixon and Kennedy, Nixon lost the vote because in that debate, Americans noticed that Nixon hasn't shaved properly. In summary,Dr Swamy said that Indians were always living in simple means and that will steer us to better times away from corruption. For instance, Railway Reservation system used to be corrupt but not any longer as corruption levels have drastically come down.
Last Part
Dr Swamy, in this part, moves from the topic of Rupee in Decline to the part on what to look for in future amidst so much negativity. He said that of all the 46 civilizations that we read about in World History, 45 of the ancient civilizations has perished but India is still suriving because of our courage and the will to stand up against opposition. Examples, Rana Pratap Singh, Jhansi Lakshmibhai, etc. We must never lose of this courage and the will to act, dr Swamy said. Conversions to other religions have happened for centuries in other parts of the world but India still remains Hindu upto 80 per cent. Persia used to be the land of Zorastrians but this has become muslim. Eurupe was converted into Christianity in less than 150 years and so on.
So, many forces are at play, he says, which are trying to destabilise India but we must not lose courage and optimism. A person like Julia Roberts has embraced Hinduism which speaks of the uniqueness of our culture, he says.
In short, another persuasive oration from Dr Swamy on a relevant topic with the usual nail-biting observations and sweeping conclusions. He said that the glory will return when this government is over-thrown.
Note: All the views expressed above are paraphrased based on Dr Swamy's speech today. He spoke in Hindi and I have merely translated the speech in English. I have not added my commentary on the speech nor verified the veracity of its contents.
