{"id":123323,"date":"2021-08-04T10:56:46","date_gmt":"2021-08-04T05:26:46","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=123323"},"modified":"2021-08-05T16:17:58","modified_gmt":"2021-08-05T10:47:58","slug":"a-rupee-wish-for-india100","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/a-rupee-wish-for-india100\/","title":{"rendered":"A rupee wish for India@100"},"content":{"rendered":"<p><strong>Source: <\/strong><span style=\"color: #0000ff;\"><a style=\"color: #0000ff;\" href=\"https:\/\/indianexpress.com\/article\/opinion\/columns\/india-independence-day-largest-democracy-global-reserve-currency-7436959\/\">Indian Express<\/a><\/span><\/p>\n<p><strong>Relevance:<\/strong> An ambitious goal for India&#8217;s 100th year of Independence in 2047.<\/p>\n<p><strong>Synopsis: <\/strong>Prosperity is possible and best accomplished by the goal of making the rupee a global reserve currency by 2047. Conditions are opportune. An analysis.<\/p>\n<h5><strong>Characteristics of Reserve currency<\/strong><\/h5>\n<ul>\n<li>A reserve currency has to serve as a medium of exchange, a store of value, and a unit of account.<\/li>\n<li>The main properties of a country having a reserve currency are &#8211; <strong>trust<\/strong> and <strong>lower real interest rates<\/strong>.\n<ul>\n<li>A\u00a0real interest rate\u00a0is one that has been adjusted for inflation, reflecting the real cost of funds to the borrower and the real yield to the lender.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h5><strong>Current situation<\/strong><\/h5>\n<p>Official foreign exchange reserves of about $12 trillion across 150 countries are currently stored in eight currencies:<\/p>\n<ul>\n<li>55% in US dollars<\/li>\n<li>30% in euros.<\/li>\n<li>15% in six other currencies.<\/li>\n<\/ul>\n<h5><strong>Positive Global environment <\/strong><\/h5>\n<p>Global factors which indicate that India can target making rupee a global reserve currency.<\/p>\n<ul>\n<li><strong>Multipolar world<\/strong>: America now accounts for less than 25% of global GDP.<\/li>\n<li><strong>The need for diversification<\/strong>: Central bank reserves in dollars have fallen to 55% from 71% in 1999.<\/li>\n<li><strong>Demographics:<\/strong> 25% of the world\u2019s new workers in the next 10 years will be Indian.<\/li>\n<li><b>Strong economic factors:<\/b>\u00a0India has never defaulted and the 1991 reforms have been accelerated by big reforms like GST, IBC, inflation targeting, education, labour, and agriculture.<\/li>\n<li><strong>Central bank credibility<\/strong>: lower-for-longer creates a quantitative easing addiction.<\/li>\n<li>Rest of the factors are: <strong>The UK\u2019s secular decline, a global shift of economic gravity to Asia, and the challenges of trusting China. <\/strong><\/li>\n<\/ul>\n<h5><strong>What needs to be done?<\/strong><\/h5>\n<ul>\n<li><strong>First<\/strong> step should be towards <strong>full capital account convertibility<\/strong>, as suggested by the <strong>Tarapore Committee<\/strong> in 1997. A 2030 deadline for finishing the agenda could be an interim milestone.<\/li>\n<li><strong>Second,<\/strong> ask trading partners to start rupee invoicing, raising corporate rupee borrowing offshore and onshore, accelerating our CBDC plans, and taking our UPI payment technology to the world<\/li>\n<li><strong>Three<\/strong>, effective Fiscal, Monetary and Economic policy agenda.\n<ul>\n<li><strong>Fiscal policy<\/strong> must raise our tax to GDP ratio, raise the share of direct taxes in total taxes, and keep our public debt to GDP ratio under 100 per cent.<\/li>\n<li><strong>Monetary policy<\/strong> must control inflation while moderating central bank balance sheet size.<\/li>\n<li><strong>Economic policy<\/strong> must try to achieve the following\n<ul>\n<li><strong>Formalisation<\/strong>: 400 million workplace social security payers.<\/li>\n<li><strong>Urbanisation<\/strong>:250 cities with more than a million people.<\/li>\n<li><strong>Financialisation<\/strong>: 100 per cent credit to GDP ratio.<\/li>\n<li><strong>Industrialisation<\/strong>: less than 15 per cent farm employment.<\/li>\n<li><strong>Internationalisation<\/strong>: higher share of global trade and skilling.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Four<\/strong>, these goals must be complemented by reinforcing institutions that signal <strong>rule of law, cooperative federalism<\/strong>, press freedom, civil service effectiveness, and <strong>judicial independence.<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h5><strong>Way forward<\/strong><\/h5>\n<p>India needs bold reforms in the next 25 years. Becoming a global reserve currency is a wholesome goal because it indirectly aligns fiscal, monetary, and economic policy.<\/p>\n<p><span style=\"text-decoration: underline;\"><strong>Terms to know:<\/strong><\/span><\/p>\n<ol>\n<li><a class=\"Hyperlink SCXW177091720 BCX0\" href=\"https:\/\/forumias.com\/blog\/unified-payments-interface-upi\/\" target=\"_blank\" rel=\"noreferrer noopener\"><span class=\"TextRun Underlined SCXW177091720 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW177091720 BCX0\" data-ccp-charstyle=\"Hyperlink\"><span style=\"color: #0000ff;\"><strong>UPI<\/strong><\/span><\/span><\/span><\/a><\/li>\n<li><span class=\"TextRun SCXW177091720 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW177091720 BCX0\">Global reserve currency<\/span><\/span><\/li>\n<li><span class=\"TextRun SCXW177091720 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW177091720 BCX0\">Tarapore Committee<\/span><\/span><\/li>\n<li><span class=\"TextRun SCXW177091720 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW177091720 BCX0\">Tax to GDP ratio<\/span><\/span><\/li>\n<li><span style=\"color: #0000ff;\"><strong><a style=\"color: #0000ff;\" href=\"https:\/\/forumias.com\/blog\/capital-account-convertibility\/\" target=\"_blank\" rel=\"noopener\">Capital Account Convertibility<\/a><\/strong><\/span><\/li>\n<li><span style=\"color: #0000ff;\"><strong><a style=\"color: #0000ff;\" href=\"https:\/\/forumias.com\/blog\/impact-of-inflation-targeting-in-india\/\" target=\"_blank\" rel=\"noopener\">Inflation Targeting<\/a><\/strong><\/span><\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source: Indian Express Relevance: An ambitious goal for India&#8217;s 100th year of Independence in 2047. Synopsis: Prosperity is possible and best accomplished by the goal of making the rupee a global reserve currency by 2047. Conditions are opportune. An analysis. Characteristics of Reserve currency A reserve currency has to serve as a medium of exchange,&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/a-rupee-wish-for-india100\/\">Continue reading <span class=\"screen-reader-text\">A rupee wish for India@100<\/span><\/a><\/p>\n","protected":false},"author":10316,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[8717,216,8716,8718],"class_list":["post-123323","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-currency-related-issues","tag-gs-paper-3","tag-money-and-banking","tag-reserve-currency","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704944584},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/123323","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10316"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=123323"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/123323\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=123323"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=123323"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=123323"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}