So India is in economic slowdown. The Indian rupee is in free-fall. Inflation is at an all time high. Recession is the word these days, and no one is happy about it. But what does all this mean, who made the dollar king, why is the rupee falling, and can we do something about it?
They say knowing the problem is half the problem solved. In this series, we try to solve half of that problem, by looking at it not as a economist, a politician, or a TV presenter (dropping heavy terms) but as a normal educated young man, who wants to know what is going wrong with the Indian rupee.
What is Inflation?
Pound for pound inflation means too much money. That however is perhaps a contradictory definition. I mean how can too much money be bad. On a more correct note, this will mean money which is not accounted for. Money which exist somewhere but there is not trace of how it got there.
Now the government (in India’s case the RBI, that’s the Reserve Bank Of India) has a certain amount of gold/silver (this is the actual worth of the country financially) against which they mint a certain amount of notes/coins. After a year, when they add up all that money, it should be equal to the amount they created earlier. If its not, they would balance that amount by creating even more money.
Where does this money disappear to?
A valid question. We would love to think, that’s it probably going to politician’s Swiss account. Or maybe to a corporate bank’s stockpile. While both those scenarios are completely feasible, and probably exist anyways, there is something even more subtle to it than just big secret scams and corruption.
So now that we have a basic idea, what is inflation, we can do something about it instead of just sulking in the corner and blaming the times. While I know its not possible to keep track of each and every paisa that we spend, the ones we do keep a track of is actually strengthening our economy. Prefer options like Debit Cards, net-banking. Avoid the grey market area. Sell property at its actual price and not ask for kickbacks. Get a bill every time you spend money; that way at least you know you are doing your part.
[NOTE: The writer is a software engineer and has never studied economics or commerce ever. Please forgive him if he makes any technical mistakes, but feel free to correct him in the comments.]