Money, Printing of Currency Notes, Inflation (contd)

30/06/2010

Excerpt from the manuscript “What Ails Indian Economy?”

Coinage is said to have been invented by the Chinese only around 700 BC. Paper currency is believed to have been invented, again, by the Chinese only around the 11thcentury AD. For trade between countries, even as late as 16th century AD, barter system was used.

At present Indian currency notes are issued by the Reserve Bank of India (RBI)/Ministry of Finance (central government). If more money is required more currency notes could be issued by the RBI and the government could borrow from them. Under the heading INTERNAL DEBT, it was seen that the per capita debt of the government is only Rs.8000 in India, while it is Rs.860, 000 in USA and Rs.1500 000 in Japan. To start with, Government could borrow an additional amount of Rs.100, 000 per head. The total per capita debt would go up to only Rs.108,000 which is just about 12% of per capita debt in USA and about 7% of per capita debt in Japan. By the additional borrowing, the government can mobilize capital of Rs. 1,00,00,000 crores. At an average wage rate of Rs.70 per head in rural areas,( the wage rate per day for a male worker is Rs.50- 70 and for female worker, it isRs.25-30 and for a supervisor around Rs.100 in states like Tamilnadu), this amount will be sufficient to pay wages for about 140000 crores man days. But under the heading EXCESS POPULATION/ LABOUR, for the massive works, the estimated man-days of labour required is only 5165 crores (51650 million). After meeting expenses on wages, there will be large amount of money which can be used for purchase of all the required materials, tools, etc, as also for undertaking other works.

If Japan and USA can manage with large internal debt, there is no reason why India cannot mange with much lower internal debt of Rs.108000 per head. All consequences of inflation etc. have to be tackled as and when they rise, but in anticipation and fear of inflation, internal borrowings need not be limited to the abysmally low figure, thereby depriving the people of work and means of livelihood. Fear of inflation should also not lead to the country’s GDP remaining at a very low level- among the lowest in the world.

From the above it is clear that there is no real shortage of capital and money in the country for undertaking huge projects and for providing buying power to the people

(written about 10 years ago)

(to be continued.)


Money, Printing of Currency Notes, Inflation (continued)

30/06/2010

Excerpt from the manuscript “What Ails Indian Economy?”

“In fact, any product, commodity or service acquires value because of the demand. Today, a music system may cost about Rs.50,000. If tomorrow, people are no longer interested in music or there are other ways of listening to music, the music system loses its value. The value of any product or commodity is based on the importance people attach to it, particularly if it is not an essential item like food, clothing and shelter. …..

To understand better, what money is, it would be useful to have some background information. Direct barter system was used in the olden days. It was possible then, as the requirements of the people were limited to, may be food, clothing and shelter. It would not have been very difficult for a person, to locate….. For example in the olden days a person would have grown cereals on his land. The other person would have grown vegetables and a third person would have grown fruits etc. all in the same locality. People knew each other well and the person who wanted to exchange his cereals with vegetables would not have had any difficulty in locating the person who had vegetables to dispose of and at the same time needed cereals.

Sometimes, people had products to dispose of, but they did not need to buy anything at that time. They therefore needed to keep something in exchange for their products. This something has come to be called the money. People used to keep their money in the form of land, cattle, grains and later in gold, silver, copper etc.

In order that goods and services are disposed of and acquired without much discussions, there is need to express their values. Earlier people might have expressed the value in terms of land, grains or cattle or other domesticated animals. People would have talked of wages of a worker in terms of units (weight or volume) of grain. They would have talked of value of some area of land in terms of cattle-10 cows or 20 cows etc. But now the value of goods and services are talked of in terms of currency -rupees or pounds or dollars or euros etc.

People are willing to exchange valuable goods and services for printed small sheets of paper- currency notes, because they know that other people would accept these papers in exchange for their goods. The currency notes thus acquire value. The same is true of gold…….

 (to be continued)


Money, Printing of Currency Notes

26/06/2010

 

Excerpt from the manuscript “What Ails Indian Economy”

“Now the question arises as to from where the country will get money to undertake the works mentioned earlier. (large infrastructural projects of roads, railway lines, electricity generation and transmission, telecommunications, sanitation, housing). To answer this question, it is necessary to understand what money is. We now buy goods and services with currency notes and coins. These currency notes and coins are called money. W can also buy goods and services with Bank cheques and hence these bank cheques are also money. Of late, credit/debit cards are increasingly used to buy things. Hence these cards also qualify to be called money. Already, in many countries coins are not in circulation. After a few years, even currency notes may become rare and in next few years/decades even cheques would become rare and the credit/debit cards would be the main form of money. There may be new instruments in future which one is unable to guess now.

 What is said above means that money is not a product or commodity. It is a concept only. As of now, it is mostly just sheets of paper (currency notes) which are accepted by the people on certain guarantees of the government of the country or issuing bank as a medium of exchange. Thus for a Government, money can never be short s it can print as much currency notes as required.

There will be a lot of arguments against printing of currency notes. Some may talk of stock of gold against which currency notes are to be printed. These people may that gold has value as metal/product. But this is not correct. If people do not attach importance, gold will have no value. For example, if tomorrow the ladies prefer to have ornaments in plastic, instead of in gold, or if thy do not want to wear any jewelry at all, gold loses its value. If the governments do not want to hold it as stock, it loses its value. When the British government was no longer interested to keep large reserve of gold and sold some quantity, the value/price of gold came down.. (to be continued)


Tamil, the oldest living language

26/06/2010

 

Tamil is the oldest living language. This means that the Tamil language spoken by the people is the same as was the Tamil spoken two or three thousand years ago. This is true only partially  as Tamil people cannot understand the literature of sangam period (1 BC to 1 AD) without some assistance by way of meaning for words which are no longer in usage. However, fortunately, many of the words which are not in use in the present Tamil is in use in sister languages like Malayalam, Kannada and Telugu(particularly Malayalam).. For example, words- nouns like Wellam(water), sevi(ear), oon(meal) vurakkam(sleep) and verbs like (kazhinge), iiy(give), perugu(increase), nagu(smile) –are in current use in these languages. Media should play a major role in popularizing and using these and also the words which are not in use in any of the Dravidian languages.

 Government should also encourage usage of  old literary Tamil words which are not currently used in Tamil language by instituting awards for those writers and media who bring  such words in current usage.

 Of course, the people should stop mixing foreign words in their Tamil conversation.

Tamil will be truly the oldest living language only when the words do not disappear and are not replaced with new words with the passage of time. There is however no bar for adding new words.


World Classical Tamil Conference 2010

21/06/2010

On the occasion of the World Classical Tamil Conference, Coimbatore 2010, Government of Tamilnadu could consider the following:

i.setting up of North India Tamil Propagation Society, on the lines of Dakshin Bharat Hindi Prachar Sabha

ii establishing centre for publishing research works  on links between Tamil language and the Dravidian Languages of Central, North and East India like Gondi, Kishtwari, Kurukh, Bharia etc

 iii. centre for research on links between Tamil and foreign languages like Senegales, Japanese, Korean, Mongolian, Finnish etc.

iv.Institute for translation of major Tamil works starting from pre-sangam literature into the other Indian languages

v.distribution of Thirukural in local languages to fresh graduates outside Tamilnadu.

 vi.arranging distribution of Thirukural among major hotels throughout India for placing in guest rooms for reading by hotel guests,as is being done for Bible in some countries.