Rupee is a Foreign Currency

Indian Rupee

Following a gap of several months, discussions on the issue of Rupee crunch have resurfaced.

Business houses, other commercial entities and financial institutions yesterday met in Thimphu to discuss issues they were facing ever since the Rupee crunch issue that shows no signs of looking up whatsoever.

Businessmen feel banks discontinuing to lend money, and at the amounts they required, hobbled their activities.

It, however, remains unclear which facet of the business has been affected by the Rupee crunch, because retailers in the market claim to be thriving, because not everybody can make trips to the bordering Indian towns and lift supplies.

Feeling the pinch are a few businesses, like car dealers, who still believe the government’s sticking to the ban on import of cars affected them hardest, contractors building private structures, and importers of miscellaneous goods.

In reality, it is not so much a ban the government imposed on import of cars, but the stiff measures they had the central bank take, that made import of cars difficult.

When release of Rupee is tightened, it is obvious that car dealers, who lift cars from India and other foreign nations and pay in foreign currency, will come to a screeching stop in how they conducted their business.

In an attempt to exonerate themselves, representatives of the financial institutions clarified, while they were willing to ease the issue through further external borrowings, for which they claim to have found a ready lender, it was thwarted by the central bank.

The central bank probably turned down that idea, because such measures are only short-term, and will only exacerbate the existing financial conundrum.

It will allow the banks to lend money as they did, which apparently led to the situation the country is in today, more cars will be bought, houses constructed, people will visit bordering Indian towns frequently, and spend on what is already available in-country until the banks’ borrowed money is exhausted.

The cycle ensues thereafter.

The issues businessmen raised, and the proposals they wish to submit, reflect growing commercial interest and a vested one at that.

Don’t we have too many cars on the road already, enough structures exploiting more and more land, both arable and forested, and are we not already living far lavish lives than what is expected of a donor-dependent, low-income nation, one that should be driven more by needs than insatiable wants?

Bhutanese are finally beginning to see the Rupee as they would any other foreign currency, and learning to make do with less of it, which subsequently goes to encouraging and promoting the country’s own local produce.

That is a positive sign, the fruits of which will be reflected in the lives of the future generations.

 

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KUENSEL editorial, 18 September, 2012

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This story from Sonam Pem

Sonam Pem has the distinction of being our very first author on Bhutanomics.

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