04-27-2007, 01:06 AM
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Dollar signs </b>
The Pioneer Edit Desk
100,000 reasons to buy the world
Nostalgists and cine-buffs will remember Around the World in Eight Dollars as yet another Raj Kapoor ode to Indian austerity, with a cameo appearance by cricketer Frank Worrell. Those who can remember foreign travel in the 1960s - or even two decades later - will not recall it with the indulgence reserved for an old film. A foreign exchange scarcity caused by policies that looked upon international trade as evil; an illegal financial transfer industry called hawala; a ridiculous FTA that made smugglers of good middle class folk, forcing them to hide dollars in suitcases and socks; vapid slogans like "Be Indian, Buy Indian" - it was a surreal world. Today, it seems so far away, a 20-something would be entitled to wonder if it were all fiction. Earlier this week, the Reserve Bank allowed every Indian who could afford it to send out of the country $100,000 a year, invest it in stocks and shares, buy property, gift it to a friend or child. A hundred thousand dollars cannot make you a millionaire in New York but it is not money to be sneezed at. It may seem a new toy for the very rich but it need not be so. It can allow salaried-class Indians to buy sea-facing apartments in Colombo should Chennai be too expensive or simply too crowded. It can allow the intrepid investor to hedge his bets and buy stocks listed on the Dow Jones or Hang Seng indices. In doubling the limit for the foreign exchange Indians can now repatriate, the RBI Governor has shed some of the defensiveness that have marked recent monetary policy - evidenced in, for instance, the gradual climb of interest rates . In 1991, India was a pauper, able to afford scarcely a few weeks of imports. A decade-and-a-half on, the central bank is sitting on a deep bed of dollars and encouraging people to spend. It is this confidence that is allowing Indian companies to borrow abroad and buy up companies overseas. It is this audaciousness that is now being transmitted to the individual.
Other than being a slap on the face of Cassandras who predicted the death of the Indian economy when reforms were initiated in 1991, the RBI's $100,000 bonanza indicates two things. <b>First, it is another step, innately cautious and calibrated in the best traditions of India's central bank, towards full convertibility. That fungibility is necessary for Mumbai to become the pan-Asian financial services hub that a recent Government committee says it can. Second, it allows Indian retail investors to jump across the infrastructural blips and policy-induced sluggishness that periodically subdue the Indian economy. Investments in foreign financial instruments are already possible through mutual funds. It is only a matter of time before directly buying and selling stocks on Wall Street is possible, through the empowering medium of web-based trading</b>. As numbers grow, the average cost of transaction too will fall, and small investors from Manali or Warangal will be able to buy little holdings in Microsoft or Wal-Mart. It's an inspiring thought for anybody who remembers Raj Kapoor and his eight dollars.
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The Pioneer Edit Desk
100,000 reasons to buy the world
Nostalgists and cine-buffs will remember Around the World in Eight Dollars as yet another Raj Kapoor ode to Indian austerity, with a cameo appearance by cricketer Frank Worrell. Those who can remember foreign travel in the 1960s - or even two decades later - will not recall it with the indulgence reserved for an old film. A foreign exchange scarcity caused by policies that looked upon international trade as evil; an illegal financial transfer industry called hawala; a ridiculous FTA that made smugglers of good middle class folk, forcing them to hide dollars in suitcases and socks; vapid slogans like "Be Indian, Buy Indian" - it was a surreal world. Today, it seems so far away, a 20-something would be entitled to wonder if it were all fiction. Earlier this week, the Reserve Bank allowed every Indian who could afford it to send out of the country $100,000 a year, invest it in stocks and shares, buy property, gift it to a friend or child. A hundred thousand dollars cannot make you a millionaire in New York but it is not money to be sneezed at. It may seem a new toy for the very rich but it need not be so. It can allow salaried-class Indians to buy sea-facing apartments in Colombo should Chennai be too expensive or simply too crowded. It can allow the intrepid investor to hedge his bets and buy stocks listed on the Dow Jones or Hang Seng indices. In doubling the limit for the foreign exchange Indians can now repatriate, the RBI Governor has shed some of the defensiveness that have marked recent monetary policy - evidenced in, for instance, the gradual climb of interest rates . In 1991, India was a pauper, able to afford scarcely a few weeks of imports. A decade-and-a-half on, the central bank is sitting on a deep bed of dollars and encouraging people to spend. It is this confidence that is allowing Indian companies to borrow abroad and buy up companies overseas. It is this audaciousness that is now being transmitted to the individual.
Other than being a slap on the face of Cassandras who predicted the death of the Indian economy when reforms were initiated in 1991, the RBI's $100,000 bonanza indicates two things. <b>First, it is another step, innately cautious and calibrated in the best traditions of India's central bank, towards full convertibility. That fungibility is necessary for Mumbai to become the pan-Asian financial services hub that a recent Government committee says it can. Second, it allows Indian retail investors to jump across the infrastructural blips and policy-induced sluggishness that periodically subdue the Indian economy. Investments in foreign financial instruments are already possible through mutual funds. It is only a matter of time before directly buying and selling stocks on Wall Street is possible, through the empowering medium of web-based trading</b>. As numbers grow, the average cost of transaction too will fall, and small investors from Manali or Warangal will be able to buy little holdings in Microsoft or Wal-Mart. It's an inspiring thought for anybody who remembers Raj Kapoor and his eight dollars.
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