Atul Gupta: Currency-&-Inflation @ Economy2010

Atul Gupta: Currency-&-Inflation @ Economy2010: "The Year 2010 is behind us and hence ideal time to see major activities in our(India) economic system that will define the year ahead for us..."

Currency-&-Inflation @ Economy2010

The Year 2010 is behind us and hence ideal time to see major activities in our(India) economic system that will define the year ahead for us. 

Indian economy can be divided into different sectors namely Industry & Services, Agriculture, Banking & Finance and Energy & Power. All of these sectors in New India are majorly impacted by how Currency Market and Inflation performs. The reason may be that with each passing year India's international/external trade is increasing. It is set to cross $550 billion this financial year with Imports of $350 billion. India's GDP is approx $1.5 trillion and by 2020 it is likely to reach $4.5 trillion. Globalization is the buzz word and its implications are many. Competition and interdependence has increased between world economies. Hence Indian economy can no longer be determined entirely by domestic policies and domestic market performance. We are now rather influenced by domestic as well as international policies and global economic conditions. Best example I can think of is Gold prices and share prices moving in opposite direction before 1990s when economy was not liberal. Today the prices of gold and shares are rising simultaneously.

So I believe that under present scenario the Currency Market and Inflation play a defining role in our Economy. Major factors that influence the Currency Market of a country like India is Interest Rate, Foreign funds, Oil, Polical leadership, Economic data, RBI intervention and Natural calamities. Inflation on the other hand is influenced by Liquidity, Commodity Prices and Food article inflation.

Currency Market: Different currencies react for different reasons. Indian Rupee may depreciate against the USD, while at the same time other major currencies may appreciate against the USD. Many times despite Interest Rate hike by FED, the USD depreciates (though it is suppose to appreciate), primarily due to the release of negative data about current account deficit in the US. Similarly, increase in the Repo rate by RBI results in the INR getting marginally stronger against the USD, but at the same time due to positive data released on the US trade deficit, the USD was still strong against other major currencies. A currency may sometimes strengthen when inflation rises because of expectations that the central bank will raise short-term interest rates to combat rising inflation (Please note that higher inflation have negative impact on currency market). Generally, the more healthy and robust a country's economy. the better its currency will perform, and the more demand for it there will be. Similarly, increasing productivity in an economy should positively influence the value of its currency. The outlook for currency market seems mixed cause of the fact that foreign funds will pour more money in equity market however at the same time inflation & fiscal condition leaving negative impact.

Inflation: Fund inflows from FIIs, higher disposable incomes and tax cuts (putting more money in the hands of customers) has resulted in a surge in liquidity in the economy. Crude oil, metals and precious metals like gold & silver have gone up quite significantly resulting in a cascading effect on commodity prices. Food articles inflation is mainly derived by monsoon. Shortfall in the monsoon last year in one of the main drivers for raising food inflation. However good monsoon resulting in good crop this year coupled with last year's base effect is expected to bring down the inflation rate in next few months. Thus we can conclude that due to high liquidity, commodity prices and food articles inflation, the inflation will remain high and will take time to come under control. The implications of higher inflation impact the interest rates moving them high, stock market sentiments take a hit as borrowing becomes costly and margins decrease, commodities shop up resulting in income categories facing the brunt of rising prices and people with fixed incomes effecting very badly. 

Lastly, here is some interesting data I recently came across:

- Just 50 million people have passport (5% of polulation)  

- Around 2% people participate in the stock markets

- 20% of population (220 million) are bank account holders

- In 2010, India Inc sealed record US$55 billion M&A deals. 

- Mobile phone connections have already zoomed beyond 700 million and are expected to cross 1 billion by 2015.

- Television penetration accoding to industry estimates, will cross the 60% mark by 2020.

- More than  one third of the population is likely to be living in cities and towns by 2020.

- India now has 33% of worlds poor (people earning less than $1.25 per capita per day in PPP dollars).

- It is estimated by the World Gold Council, the premier global institution on all matters on the yellow metal, Indians, including the government, hold an estimated 18,000 tonnes of gold worth some $800 billion now, or 11 per cent of the global holding.

My First Half Marathon

There are two great days in our life. First, the day we were born. Second, the day we prove why we were born. There is an ongoing quest justifying the very thought to find it out. Believe in your self and grow to the top of the world become mottos of life. Suddenly you realize that something is missing and after giving deepest of your thoughts and months & years of soul search you realize that may be lack of focus and living life as it comes is what require to enjoy the best in life.

For a person who can’t run 100 meters, thought of going for early morning jog at a friend’s request is definitely not exciting. However the sheer part of being with friends for some time, after week of hectic schedule, is in itself a pleasing thought, giving enough zest to wake up at 6am, getting picked up and drive towards India gate. You start your run together with friends and after 100 meters you feel the dose of it. Your breath becomes heavy, your body starts loosing on you. But you continue to run shoulder to shoulder with your friends. You start feeling fatigue, speed scrawling down but by then you covered 300 meters. Thighs starts giving up, back and shoulder feeling the pinch of pain however you continue with run. You feel the cold air, the pressure at your stomach, eyes desperately looking for a target to reach. By the time you realize, you almost covered 500 meters! You still try to continue, reaching your limits but your breath is so heavy that you give up for the sake of oxygen to get in. The experience of this run enthralled for entire day. You feel a sense of happiness and like to continue for next weekend too.

Weekend after weekend you create a sense of passion for running. You start enjoying your run and try to complete the distance from India gate to Rashtrapati Bhawan which is of more than 2 km. One day while running, to your delight, you come close to your target and see the hazy panoramic view of Rashtrapati Bhawan, body demanding for a rest but your mind screaming “You can do it”. You keep running with sense of excitement. And then you touch down at Rashtrapati Bhawan with a feeling hard to describe. For a moment you feel surprised too and you ask yourself, ‘why to feel so excited about. It will not give glory or fame or medal for sake’, but still you want to live that very moment again and again.

One day a person asked my Guruji, “Why my memory is so weak?” He replied, “Brain is like computer. To keep computer safe you remove shoes outside of a computer lab. The same way you must keep junk outside of your brain”. He again asked, “But it’s very difficult, I have tried several times and I failed each time”. He again replied, “Practice makes a man perfect. Keep practicing and one day you will get success”.

Weeks passed by. Now the group has started running on all holidays and later at weekdays too. Now you are able to finish one complete loop of India Gate-Rashtrapati Bhawan-India Gate (approx 5 kms). It’s then you hear about Half Marathon, which covers a distance of 21km. The sheer thought of running the distance of 21 km excites you and your subconscious mind decides to give it a try. You feel like your answer perfectly fills the blank which might leave behind in life's text book.

You have four months of time to compete at Airtel Delhi Half-marathon 2009. Your challenge is to complete the Marathon. You start putting more effort with your friends. The passion for running is rising to its peak. You start focusing on diet, shoes, running gears and everything that matters to it. Your morning practice of one hour starts describing your entire day. If you practiced well you feel relaxed otherwise feel disappointed for rest of day. Your friends try hard to keep up the momentum. And now you are near to your date.

Suddenly like a crash landing, worst struck to your life and the day you complete trial run of 15km, you met with the worst leg injury in your life. It trashed your dreams and you feel like a dead end. Then you give a deep thought and find that your body was not running for almost 30years and suddenly you make him run. It is bound to have weak links and those week links are popping up giving you a tough time. Yet against all odds you decide to live life as it comes. You wait, wait and wait.

6 months have passed and your leg is back in shape. With your friends support you decide to give running a try again. Your pain still holds on to your leg but somehow you know that it’s getting better than before. You again start practicing in weekends and take it further to next level. Feeling back in confidence, you decide to compete once again in Airtel Delhi Half Marathon however this time the year is 2010. And this time too, just few weeks before the date, your body puts you at test with stomach infection. But this time you find yourself much stronger with focus at target not bothering of the consequence or the result. A week before you again give a trial shot and you find yourself at the end of 18kms, confirming that body is in shape and ready for half marathon. It’s all up to almighty & Guruji now. Haribol!

It’s 21st Nov 2010. Time is 6am. You are with your friends inside a car. From heart you are giving thanks to almighty & Guruji. Feeling a bit surprised too and somehow with each passing moment and as you are approaching the venue, Nehru Park (Vinay Marg), you feel more zest & vigor. It’s 7am. You are inside the gathering zone and ohh boy what an excitement. It’s out of the world. Feeling is hard to describe. You like to enjoy each and every moment of it. You imagined it thousand times but experiencing it for the first time. There are thousands of boys, girls, seniors, known faces, all standing together waiting for the green signal. Some taking snaps, others warming up, however all with a glow on faces.

It’s 7:30am. The half marathon has begun. You are running as if you are living the happiest moment of your life. You see running shoulder to shoulder with thousands of other. After 30 min, you see 5km milestone. Soon you find the 7km and decide to continue without taking a break. Even though you are surrounded by thousands of runners still you are all alone in your own running track. And suddenly as if you wake up, you realize that 15km has passed by and only 6km to go. It’s time to continue and complete the rest without taking any break. With each passing minute you are getting an experience of your life. People standing on side lanes are clapping and cheering. Photographers are clicking your pictures in the best of frame. It fills you with much needed energy. Now just one km is left and you know you are close enough to the target. You increase your speed. You hear voices of enthusiasm telling you to keep moving. To your delight you see the finish line. The time has come to cross it. And it is time to fill the blank space for which you waited from quite sometime. You complete the run in 2 hours 7 minutes and 6 seconds. A time even your friends are proud of.

I am not sure what you have gained out of it. However I know that I found my Passion. And as you all know, ‘To dream anything that you want to dream, that’s the beauty of human mind. To do anything you want to do, that’s the strength of human will. To trust yourself to test your limits, that’s the courage to succeed.’

My Guruji once said to me… "A Mountain is not higher than your confidence, because it will be under your feet, if you reach the top!"

Haribol!!

(Dedicated to my Guruji and my Friends Sanjay Jindal, Anjuraj Singh, Hariom Gupta and Ashish Maini)