Vacation on Cruise

Vacations on Cruise has gained a lot of attention these days. More and more people from different sections of the society are undertaking tours on cruise ships. Industry statistics show that this is one of the fastest growing segment in the leisure travel market. The following facts and figures would give a birds eye view of this market:

• This is one industry where demand consistently exceeded the capacity for the last three years.
• Capacity utilisation on cruise ships is 100% consistently.
• Number of global ocean cruise passengers went up from 24.7 million in 2016 to 25.8 million in 2017 and further to 27.2 million in 2018.
• Unless booked in advance, berths are not available on many popular tour destinations.
• More than 1000 ports, big and small, support this activity.
• There is addition of new vessels every year. For the next five years, more than 50 new ships are being built.
• People from all income groups are availing the cruise vacations. Number of passengers from the budget travellers group is showing a higher increase.
• Younger generation travellers are more attracted to cruise vacations. 
• Repeat travellers are on the increase. It is not "once in a life time" any more.
• Demand for cruises to cold climate destinations are on the increase.
• The industry provides more than one million jobs directly and indirectly.
• More destinations from Asia and Africa are being added to the list of places served.

A discussion about the concept of "Vacation" and "Vacation on Cruise" become relevant in this background.

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Online Dictionary defines "Vacation" as "a period of suspension of work, study, or other activity, usually used for rest, recreation, or travel, recess or holiday". It is also mentioned as "a part of the year, regularly set aside and freedom or release from duty, business or activity". Thus the word vacation indicates that it is a period of time set aside to give relief from the routine things and a time at which the vacationing person need not worry about the various issues that arise during normal working/living days. This includes maintaining/cleaning of the living premises, buying, storing and managing of daily essential items, worrying about food rom time to time etc. It is not just those who are employed, but also those in business or profession or even those who are enjoying their retirement days. Thus the concept of vacation is all pervasive and applicable to those who have regular working or business hours as well as those who have no work to do at all!

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"Vacation on Cruise" has a very interesting history. The first cruises are dated back to 1844 when trips to Gibraltar and Greece were offered from England. It is claimed that the first vessel exclusively for cruise vacations was built in 1900 by a German company. Thus cruise vacations are more than a century old. One of the famous Perry Mason novels centres around a cruise holiday trip Perry Mason takes from Vancouver to Los Angeles. "The Case of the Substitute Face" deals with a murder that took place on the cruise ship by pushing a man overboard. A popular serial aired during 1950s and 60s (can be seen even today on Amazon videos) on this episode shows many scenes shot on a cruise ship Westminster - Liverpool.

Cruise vacations industry has come a long way since then, especially in the last two decades. Luxury cruise ships provide wonderful packages that combine many adventures for attractive and bargain fares. The many advantages of vacations on cruises are encouraging more and more travellers to avail the benefits of cruise vacations.

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In the Indian context, understanding evolution of "vacation" is very interesting. Some fifty or sixty years ago, when we were children and studying in schools, most of the families had a number of children living under one roof. The idea of Family Planning, or Family Welfare, as is now known, was not existing then. Joint family actually meant generations of persons living together under one roof, unlike today's definition of joint family where husband and wife living together is sometimes referred to as joint family! Having a number of children was the norm for couples. Early marriages and marriage for life in the absence of divorces was another cause. Economic criteria was not relevant despite the fact that many families struggled to provide basic necessities to their children. After independence in 1947, Government of India laid emphasis on birth control to contain population explosion and the ministry taking care of Public Health was renamed as "Ministry of Health and Family Planning". Family Planning earned lot of notoriety during the Emergency period (1975-77) due to forced surgical operations to enforce family planning. After the Janata Party came to power in 1977, Shri Raj Narain who defeated Smt. Indira Gandhi from Rae Bareli constituency in UP became the minister of health and renamed the same as "Ministry of Health and Family Welfare" to make it appear more acceptable in those days. Small family norms became a mass movement in the society.  

The initial recommendation was for three children for a couple which got reduced to two in due course. Next generation further simplified it to one child family and the latest generation is tending towards no child family. A day may come when a group of families (couples) may decide to have one child for the whole group and share the expenses of raising the child as the popular opinion nowadays is that "Children are costly". Of course, same sex marriages which have now become legal will also contribute abundantly in this cause.

Fifty years ago, when the family head was finding that his earning was not sufficient to provide for the basic necessities to his dependents, the concept of going on a vacation was very far from his mind. Most of the women were not earning (they were working at home alright, but not paid) and did not have much say on various matters. They would have certainly loved vacations, but did know what a vacation was. At the most they would have extra work during school holidays when guests arrived for their holidays (not vacations)! The ideas of vacation remained only in the annals of the affluent and aristocratic families.

Improvement in service conditions for salary earners and development of small families helped enhancing the economic conditions of working people. Introduction of LFC/LTC in government and public sector undertakings brought the concept of vacations to more and more sections of the population. Leave encashment facility put more money in the pockets of families to take care of expenses when they went on vacations. Improvement in communication and transportation facilities made visiting far off places convenient and possible. Advent of computerisation and internet made access to knowledge of vacation sites easy and mobile phones brought this within the reach of common man. 

Development of hospitality industry bringing in good hotels, resorts and recreation facilities further enhanced enjoyment of vacations. Reduction in cost of travel and creation of budget travel apparatus has given higher fillip to vacationing. Even weekends have become time to go away on brief travel as many families own cars and those who do not own can hire them according to their economic status. Enhanced educational and employment opportunities have made members of families to live and work in different parts of the world. Traveling has become both necessity and easier. Family get-togethers  with going on vacation has become so common that one can hear people talking frustratingly about not taking any vacations for more than six months or a year! Organised tour operators are now giving end to end travel solutions with confidence that paying a certain sum of money will take care of all expenses on a given trip. Experience of those making such trips are spurring more uninitiated to plan for vacation travel.

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Options for Vacation on Cruise is to be viewed in this background. There are many popular cruise routes around the word. Modren luxury cruise ships provide fantastic amenities while vacationing on them. There are various options for enjoying vacations on cruise ships. A discussion on these areas will, however, have to wait for another day! 

Are You The Same Person?

Among the many popular stage plays in Sanskrit language, Mrichchhakatika occupies a pride of place. This play by poet Sudraka, written nearly 1800 years ago, is a 10-Act Drama that has been translated to many languages. It is translated into English under the title "The Little Clay Cart" at least twice by two different westren scholars. It is said to have been staged many times in Europe and America as well. Its French adaptation under the name "Le Chariot d'enfant" generated a lot of interest in the west about Indian stage productions. An earlier version of the same theme by name "Daridra Charudatta" is said to be written by the celebrated poet Bhasa.

The central characters in this play are a rich courtesan (Nagaravadhu) Vasanta Sena and a noble poor person by name Charudatta. The story is set in the Ujjain town of the present Madhya Pradesh in Central India. Samsthanaka or Shakaara, Aditi (wife of Charudatta), Maitreya and others form the supporting characters in the play. The story revolves around the love affair between Vasanta Sena and Charudatta and the villany of Shakaara, brother-in-law of the king, who is chasing Vasanta Sena. 

Mrichhakatika has fascinated the film industry as well. One of the earliest films ever made was on this topic. A Kannada silent film was made on this theme as early as 1931. A film by name "Utsav" was made by Shashi Kapoor as producer with Girish Karnad as Director, in the year 1984. The leading actors were Rekha and Shekhar Suman as Vasanta Sena and Charudatta respectively, and Anuradha Patel as Charudatta's wife Aditi. The role of Shakaara was reserved for Amitabh Bachan, but was ultimately done by Shashi Kapoor himself due to inability on account of an injury suffered by Amitabh Bachan while shooting another film. Shankar Nag, Amjad Khan, Anupam Kher, Neena Gupta, Kulbhushan Kharbanda and others also acted in the film. 

The film Utsav is known for many side attractions. Music provided by Laxmikant-Pyarelal was quite popular. There was a rare duet song "Mann Kyon Behka" sung by the Lata Mangeshkar - Asha Bhosle sisters, and pictured on Vasanta Sena (Rekha) and Aditi (Anuradha Patel). This song was an effort to show that there was no ill-will between Charudatta's wife and Vasanta Sena. Another song "Mere Man Baje Mridang" sung by Anuradha Paudwal got her the "Best Female Playback Singer Award" in 1985. There was also a song sung by Suresh Wadkar as well. The film met with limited commercial success but was a notable contribution to art cinema. 

There is a hilarious scene in Act 5 of the play,  Mrichhakatika. A messenger comes to inform the arrival of Vasanta Sena to be communicated to Charudatta. He meets Maitreya, a friend of Charudatta and gives out the message as a riddle. He asks two questions the answers to which lead to unraveling the name of Vasanta Sena. Each time Maitreya gives a wrong answer. When the messenger says the answers are wrong, Maitreya goes to Charudatta and finds the correct answer and relays the same to the messenger. The first question asked is "What is the season in which mango trees flower"? Answer given is "Summer" which is later corrected as "Vasanta", meaning "Spring". The second question is "What is it that protects a City?". Answer given is "Roads", which is later corrected as "Sena", meaning "Army".

The messenger asks Maitreya to club the two words to find the name of the person who is arriving. Maitreya replies "Sena Vasanta", putting the second word first. The messenger asks him to change the order of the words. After a funny interlude finally the name "Vasanta Sena" is found out by Maitreya. The scene is very comical and provides relief to the viewer between the more serious parts of the play that are enacted on the stage.

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Airline companies generally allow online checkin before 24 hours from the time of departure of the flight. This process helps prevent crowding at the airline counters at the airport, thus reducing work for the airline just before departure of the flight as well as being convenient for the travellers. Those with only hand baggage are benefited most and even those with baggage can just drop off the luggage before proceeding to security checks. The travellers can print their own boarding passes from either the comfort of their homes or hotel rooms. Boarding passes can also be printed at the kiosks provided at the airport lounges. Technology has rendered the whole process swift, painless and cost-effective.

The same process is also used for international travel with a small difference. Some countries require verification of visa requirements before a traveller is allowed to board a flight to their country. In such cases, the traveler is required to upload his/her passport and visa details on the airline website well before the online checkin process starts. The information so uploaded is relayed to the concerned country's computer systems which check correctness of the details of the traveller and clear online checkin. Airline companies do not allow a passenger without such clearance to board the aircraft. This system is helpful in preventing travellers without proper Visa or designated travel documents from landing at the airport of the destination country and further complications in handling such cases when the traveller has already reached their doors. "Prevention is better than cure", is the logic for such practices.

A surprise awaited me when I tried to checkin last week on a British Airways flight from Bangalore to London with onward connection to USA. When logged into the system just after the window for online checkin opened, the system refused allotment of a seat for reason that the details of the passenger uploaded were not acceptable and required clearance by the destination country. Further efforts indicated that the details provided were correct but yet clearance was not possible! The advice was to contact the consulate that issued the Visa for assistance. All efforts to resolve the issues with the Consulate did not yield any result as such cases cannot be resolved over telephonic intervention. Enquiries with the travel agent who booked the ticket suggested going to the airport a bit early on the day of travel and sorting out the issue there with the airline.

This is not at all a comfortable situation when a long journey to another country is undertaken and especially when other members of the party on the same ticket are cleared for travel. Frantic efforts to contact the customer service support of the airline brought out various reasons for such a situation to develop. Some of them could have been:

• Details of the Visa and Passport do not match as the Visa is pasted on an earlier passport. Airline websites provide for only one passport details to be uploaded and not of all earlier passports. Visa issued on an earlier passport is a very common occurrence especially when 10-year Visas are issued to travellers.
• There may be a small spelling mistake in the names on the ticket and travel documents.
• A space between names in ticket is either omitted or added, thus creating a difference between the ticketed passenger details and travel documents.
• A random checking for detailed physical scrutiny of travel documents for some passengers required before boarding.
• A temporary bar placed on travel of some persons despite issue of travel documents.

There was no other alternative but to go the airport for sorting out the issue and hope for the best! 

When the ticket and travel documents were produced at the counter at the airport, the young executive smiled at me and asked how the ticket was booked. Before answering the question she shot another question: "Are you the same person?". I mentioned that the problem could be because the visa was available in the old passport which was also produced there. She mentioned that she cannot accept the explanation as the person described in the ticket and the travel documents are not the same. It took  a few moments for me to understand the problem.

The problem was the same as was confronted by Maitreya in Mrucchakatika. The names were reversed. Just as Vasanta Sena had become Sena Vasanta, Keshava Murthy Pattabhi Ramaiah had become Pattabhi Ramaiah Keshava Murthy. In other words, instead of me my father was was booked as the passenger as the first name had become the surname and surname had become the first name! But the travel documents was in my name. While feeding the data into the system, the agent had reversed the names.

The executive repeated that she cannot accept me as the passenger booked for the flight. Looking at my bewildered face, she advised me to wait for sometime till the necessary changes were made and clearance was obtained. Luckily, her efforts to seek change and get clearance were answered in the next 15 minutes. Journey was cleared, seats allotted and boarding passes issued. The suspense of 20 hours finally ended favourably.

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What is the learning from this episode? First one is that a copy of travel document should be kept handy while feeding data on the computer systems for booking. Taking names and other details over phone may result in such anomalies. Secondly, a through check of the details in the ticket with the documents is to be done on receipt of the documents. Thirdly, those believing in the strength of prayers to smoothen things while traveling should add an additional prayer while booking and undertaking international travel!

Efforts, Recognition and Rewards

The Creator has bestowed each one of his creations with some capabilities, resources and talents. This is true of any item we come across, whether living beings or non-living things. Non-living things do not realise these and are only a tool in the hands of a living being. Other living beings also often do not appreciate this to the fullest extent and have very limited use of even their own capabilities or faculties. Man is one living being endowed with multiple capabilities and talents, and also having the power to use, channelise and harvest these multiple talents. Man is not only able to use his own faculties and resources but also put to use other resources, be it physical, mental, living or non-living. This distinguishes him from all other creatures. This special competency provides him opportunity to put efforts to achieve his goals, after deciding about the goals themselves. Being a social being, he also desires to be recognised for his efforts and accomplishments. Mere recognition is not the ultimate desire for many for putting forth efforts in a given direction; they also yearn for rewards for the efforts put and the recognition made by the society of their efforts. The concept of "Nishkaama Karma" is indeed beautiful, but does not always find acceptance in a materialistic world.

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What is the real meaning of these three words - efforts, recognition and reward? Dictionary gives many different meanings, but the most common and acceptable meanings provide a beautiful link to these three words. Effort is defined as "exertion of physical or mental power" or the "amount of exertion expended for a specific purpose".  Efforts are required to reach a pre-determined goal; otherwise the goal only remains in the mind or paper. It is well-known that a lion has to identify and hunt its prey; the animal does not come and fall in the mouth of a sitting lion. As regards a man living in a structured society, recognition of such efforts to realise a goal becomes important. Recognition is defined as "the acknowledgement of achievement, service, merit etc." or "expression in the form of some token appreciation" by others around him. Does some token appreciation suffice? It may be so for some minor efforts and trivial goals. What about an appreciable quantum of efforts put in and a reasonable harvest of results? That requires something more than a mere token appreciation; it deserves a reward. A reward is defined by the dictionary as "something given or received in return to recompense for service, merit hardship etc." Thus there is a bond between the three, which is a means and ends relationship in a civilised society.

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When we glance around us in the context of efforts, recognition and rewards, it is often seen that some get rewards for the efforts of others. Some others who put a lot of efforts do not even get the recognition they deserve. There are many instances where efforts are put in by someone, recognition goes to someone else and the fruits of rewards reach yet another! This is all the more true when we scan through the tributes paid to a departed soul by the leaders of the society. Sometimes it sounds funny while at other times it hurts. "He will always be known as a poet who richly deserved the Jnanapeeth Award, but never got it", is an example of one such comment. The one paying such tribute would have even worked very hard to deny the award or reward to the concerned person! Luck does play its part when extraneous issues come to the forefront pushing behind real merit or deserving credentials.

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The post of the Speaker of the Lok Sabha in our country is held in high esteem. Many distinguished personalities have occupied this prestigious post and set very high standards in conducting the business sessions of the august house. It is normally reserved for one of the senior most member of the house as the belief is that a senior member knows the rules of functioning of the house well. Other experiences as well as the respect they command from the other members are of vital consideration. Sometimes Politics also plays an important role for selection of such candidates. It is used as an alternative post to someone who should have been given a rightful place in the Cabinet, but the leader is uncomfortable in having the person there. It has also been used to accomodate a representative of a friendly party in the give and take game of politics. 

Many names were making rounds as to who would be the Speaker of the 17th Lok Sabha when the house was constituted recently after month long general elections. Press, Media and Political Pundits gave the post to many persons with lengthy justifications. Ultimately the one chosen as Speaker was Shri Om Birla, who was elected to the Lok Sabha only for the second time! Not many had heard of him though he had a distinguished political career thus far.

In the background of our discussion on Efforts, Recognition and Rewards above, the election of Shri Om Birla makes a very interesting case study. What are the special qualities of Shri Om Birla that have catapulted him to this distinction? 

• Shri Om Birla, born on 23rd November, 1962, in Kota, Rajasthan, worked as student leader during his educational career and was known as a good organiser.
• He won his first major election to the Rajasthan Assembly form Kota in 2003.
• He won the next two elections to the Assembly as well, in 2008 and 2013, each time with bigger margins. 
• As three times member of the Rajasthan Assembly he worked tirelessly for bringing Chambal river waters to his area.
• "Paridhan" is a program run by him that provides free books and clothing to students/people  in his constituency.
• He runs a free blood supply group in his area.
• An arrangement for providing free food to the poor is available under his guidance.
• A free medicine bank is established to provide medicine to the needy.
• Special relief is available to Cancer and Talassemia, a disease associated with low red blood cells count.
• He is involved in providing artificial limbs to the Physically challenged.
• A nutrition and employment program is run for the tribal people.
• His team of volunteers did excellent relief work in the 2001 Gujarat earthquake victims. 
• This is his second stint in the Lok Sabha. He has worked in the Parliamentary Committees assigned to him with distinction.
• Average participation of members in 16th Lok Sabha debates was 67. For Shri Om Birla it was 163.
• He raised 671 questions in the house as against a house average of 293 per member.
• He has a remarkable reputation in the house; when he gets up to speak, everyone knows that he is going to ask for something to his constituency. He does not end it by asking; he follows up and gets it done.

Shri Om Birla has started on the right note by admonishing members who are speaking among themselves during the house proceedings, not sparing even the seniors. He has ruled that no religious slogans can be raised in the house.

People outside his area of work probably did not know much about him. He was like the proverbial fruit behind the leaf. He has now received the rewards and recognition for his long service to the society. Now that he has become the Speaker of the 17th Lok Sabha, we may hear about him more often. Good luck to him!

Seven Types of Food

What is "Food"? What items constitutes food? What are the different categories of food? What happens if the supply of food stops? Whether food came first or consumers came first? Who creates and controls food? Is there any custodian for food? Are there any ancient texts that dwell on these issues relating to food? These are indeed captivating questions. 

One can discuss on these interesting questions and find answers only if one's stomach is filled with food! Any activity can be carried on by living beings only when the basic need of food is met. Activities are initiated and continued either for procuring food or for preserving it for future. All other comforts follow but primacy is for food and food alone. Hunger is the prime motivating factor for all activities pursued by animals and humans alike. 

The answer to the first question "What is Food?" is answered by the dictionary as "any nourishing substance that is eaten, drunk, or otherwise taken into body to sustain life, provide energy, promote growth etc." The basic function of food is to sustain life. If the supply of food stops, activity of living beings comes down and finally life itself ceases. What items constitutes food can be answered in many ways. What is food for one may not be food for someone else. There are certain items which are near universal food. Milk is one such item. It is consumed by vast majority of living beings. Cereals and grains, pulses, vegetables and fruits also constitute food for human beings. Food may also be classified as vegetarian and non-vegetarian. Someone may differentiate between geographical areas. North Indian and South Indian Food for example. It may be Indian or Continental. There can be umpteen types of classification itself.

Whether food came first or consumers first is another interesting question. As soon as any living being takes birth or comes into existence, the first requirement is food. Other activities like growth and transformation start only after consumption of food. It is not just first consumption, but continuous consumption thereafter. Consumption stops only when life ceases to exist. Therefore it is reasonable to assume that first food came into existence and then life. Who creates and controls food and who are the custodians? These are also interesting questions but there can be many opinions and answers to them

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Discussion about "Food" can be seen in many ancient Indian texts. In fact one of the many names for the Supreme Lord is "Anna" (अन्न), which means food. In Vishnu Sahasranaama, Verse 105 mentions the names of the Lord as "Annam Annada Eva Cha" (अन्नं अन्नाद एव च). Name number 983 is Annam which means "That which is eaten by living beings, or who eats all living beings". Name number 984 is Annada which means "One who is the eater of the whole world as food". Thus he is Anna as well as Annada. Bhagavadgita also makes reference to food and "Food Cycle" as well.

The word Anna is most commonly used in our parts of the world for "cooked rice". This is a very restricted meaning. The actual meaning of Anna is indeed vast and encompasses everything that is consumed as food. In Upanishads, Anna has much wider connotation and covers all inputs required to sustain life. It is said that the real swaroopa (form) of Anna can be understood by contemplation, and not mere words.

The supply of food never gets exhausted despite being eaten for centuries and ages. How is this possible? It is because desire in the human mind is never exhausted. This basic desire creates the need to grow, find and manage food. This ensures an eternal supply of food. This also justifies the belief that mind is the most important sensory organ. The remaining five, roopa (sight), shabda (hearing), rasa (taste), gandha (smell) and sparsha (touch), are the mere outlets for this main sensory organ. 

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The most exhaustive discussion on Food can be seen in Bruhadaranyaka Upanishad. Bruhat means big or huge. Aranya means forests. A broad translation of the name can be "Secret learnings from the huge forests". Many aspects like creation of the universe, metaphysical, spiritual and psychological matters are dealt in detail in this Upanishad. Chapter I, Section 5, Madhu Kaanda, "Saptaanna Prakarana" of this Upanishad deals exhaustively about Food. Saptanna means seven types of foods. The discussions are rich in content and quality.

The Supreme Lord created Food first and then the living beings. He created seven types of foods. He himself classified them into two groups. The first four are known as "Gross Foods". The next three are "Subtle Foods". Gross foods sustain physical life. Subtle foods are significant for sustaining metaphysical life both at individual and cosmic levels. In addition to creating the seven types of food, the lord also created user groups and custodians as well! Thus each type of food is in the custody of one designated group, but its actual users are in another group. The classification is as under:

Type of food	Users	Custodians
Swaha (स्वाहा)	*Gods	Man
Swadha (स्वधा)	Pitrus (Ancestors)	Children (successors)
Crops	Man	Gods
Milk	Babies	Parents
Body (Kaaya) (काय)	The Lord	Man
Speech (Vaacha) (वाचा)	The Lord	Man
Mind (मनस, Thinking capacity)	The Lord	Man

*The word Gods in the above table denotes "subordinate functionaries of the Supreme Lord", who hold different portfolios for managing the Universe and are different from the Supreme Lord.

Among the gross or solid foods, crops are controlled by the devatas and the foods of the gods (swaha) is in the custody of the man. This is given through Yagnas on one side and rains supporting crops growing on the other. Thus they are inter-dependent. Mutual co-operation will ensure that everything is in order. Liquid food represented by milk meant for infants and growing ones is in the custody of parents. Food (swadha) for the earlier generation (pitrus) is in the custody of the successors or the next generation, their children. This is given through Kavya, by conducting annual ceremonies and periodical offerings to the ancestors. Thus the earlier generation, present generation and future generation are also linked. 

The most interesting part of the Saptaanna Prakarana is in the second group, the Subtle Foods. The three components of the subtle foods are meant for the Supreme Lord himself. Though the Lord created these three for himself, yet he gave the custody of these three items to the man created by him! Then what is expected by the Lord from the man he created? 

The body given by the Lord is to be used for the service of others in his creation. This is the best way to serve the first of the three foods to the Lord. Spoken words should be truthful and bring true happiness to those around us. This is the way to serve the second food to the Lord. Thinking of Universal welfare and devotion to the lord is the third way of offering the subtle food to the Lord. This is how a man can discharge a part of the debt to the creator, though it is believed that the entire debt can never be repaid. The Lord does not need anything and yet he has given these resources to us. That is to test how it is used by us and not for him to derive any benefit out of them. The often used term "Trikarana Shuddhi" (त्रिकरण शुद्धि) is derived from this line of thinking.

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Saptanna Prakarana in Bruhararanyakopanishad is indeed a beautiful plan and quite logical as well. Does it not look like a wonderful modren management plan with resources, custodians and users with checks and balances to ensure harmony and mutual co-existence?

Economics, Politics and Foreign Exchange

Reserve Bank of India (RBI) suddenly announced in the late evening of 16th March, 2019 that it will hold a 5 billion dollar 3 years buy/sell swap auction on 26th March, 2019. Students of banking who are just initiated into learning foreign exchange are asking questions as to what is this, why is this happening and what would be its effect on the markets. After all, such actions by the RBI are not that common. The last time this route was used by RBI was six years ago, in 2013. 

Life for human beings was very simple several decades ago. Happenings in far away lands never disturbed our lives. Economics was the exclusive domain of economists. Politics was confined to a handful of rulers or members of the ruling class. Wants were limited. Villages were like self-sufficient units. Life was carried on with whatever is available. Food and shelter were the basic needs.  Even a small hut was taking care of the shelter need. It is not so any longer. Everyday events disturb the equilibrium of our life. Things are fine when we go to bed in the night. Some overnight event in a far away land shakes the equilibrium and a new balance has to be found on the next day. Many things are not in our control. Some of the things are not in the control of even the policy makers. Life has become like an air-filled balloon. If it is pressed at one place, it bulges elsewhere. Economics and Politics affect our daily lives. We cannot escape these influences even if we so desire. 

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Election Commission of India has announced general elections to the 17th Lok Sabha to be held next month. The process takes one and a half months to be completed. Elections are called as the festival of democracy which is indeed true. But elections means campaigning, voting and counting. For the common man, the festival ends with counting. Thereafter it is a long festival for those who are elected for the next five years. It is one day festival for the voter and 4 years 364 days for those who win. Elections also means breaking old friendships and forging new alliances for the politicians. Elections are preceded by high decibel campaigning. Thanks to the efforts of successive Election Commissioners, the sound of the campaigning has somewhat come down. But the heat of campaigning continues to be the same. It can even be said that the heat is going up due to the ever pervasive electronic media. 

Election campaigning means spending a lot of money. The Government and Election Commission spend considerable amounts to handle the process. Candidates and political parties also spend heavily. There is an official limit for the expenditure by a candidate during an election. The limit for an assembly candidate in the last Telangana election was 28 lakh rupees. The Election Commission has fixed a limit of 70 lakh rupees per candidate during the next Lok Sabha elections. However, there is no limit for the expenditure incurred by the political parties. Efforts of the Election Commission to cap this expenditure is resisted by political parties. In a way, these expenditure incurred by the candidates and political parties is welcome to many people. Elections provides temporary employment to workers who indulge in door-to-door campaigning and acting as polling booth agents etc. Lot of money hoarded in black and dark boxes finds its way into the market. Printing presses and transport operators work overtime. Many other allied economic activity also picks up during elections.

The amount of money spent during an election makes astounding numbers indeed. The election to US President and Congress in 2016 cost 6.5 billion US dollars. This is equivalent to 45,500 crore rupees at an exchange rate of 70 rupees per dollar. General elections to Lok Sabha in 2014 was estimated to have cost 35,000 crore rupees. The estimates of expenditure for the next months election is around 50,000 cores (about 7 billion US dollars). PTI reports that Milan Vaishnav, Senior Fellow and Director of The South Asia Program at Carnegie Endowment for International Peace feels that it may even cross 10 billion US dollars, which would be 70,000 crore rupees. This is more than twice the amount spent by our central government per year on education including technical education. 

Thus there is a need of enhancing the current level of liquidity in the market to meet this staggering requirement of funds. The funds spent thus now will no doubt come back into the pool, but that will be a time lag. That is another problem to be faced later.

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There was a cry about shortage of liquidity in the market during the last few months. It was felt that NBFCs were facing liquidity crisis. Various actions resulted in some of the banks placed on Prompt Corrective Action (PCA) by RBI coming out of the cage and becoming free to lend further. IBC led recovery process has kindled the hopes of banking units returning to better health. The sudden burst of hostility in the borders created tensions in the markets, but the temporary truce has brought cheer to various segments of the markets. Forecasts of formation of a stable government after next elections has been received enthusiastically by the markets, though doubts on this front have not completely vanished. Demand for credit is picking up and there is a demand for higher liquidity for these reasons as well. Year end advance tax payments and other requirements also cry for liquidity support.

To address these concerns, RBI has pumped more than 50,000 crore rupees into the market through Open Market Operations (OMO) during the last two months. OMO is resorted to RBI to pump funds or withdraw funds to and from the market by either buying securities and releasing funds or sucking surplus funds by selling securities.

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There was a hue and cry six months ago about petrol and diesel prices. The all-time high prices called for drastic actions. Hardening international oil prices coupled with weakening of the rupee led this price surge. There were also some peculiar instances of token reduction in taxes on petrol and diesel by some governments. Dollar-rupee rate ran up to 74 rupees per dollar in October, 2018. There were reports about newly wed couple being presented with petrol cans as gifts. Economic astrologers belonging to opposition parties predicted that the day when a dollar would cost 100 rupees was not far off. Changes in the international scene on oil front coupled with increasing foreign investor confidence in Indian markets reversed the trend. On 8th February, 2019 one US dollar cost 71.55 rupees. Two days ago (15th March) it came down to 68.96. Heavy inflows of foreign funds into stock and bond markets pushed up the Sensex to record levels. 

One man's meat is another man's poison, they say. Importers were crying when dollar prices went up to 74 rupees, but exporters were happy. Each dollar of exports was getting them five to six rupees more last October. Indian exporters for many items have to face stiff competition in international markets from exporters of neighbouring countries like Bangladesh, Sri Lanka, Pakistan, Malaysia, Jordon and others. Government supports these exporters through various schemes like refund of excise and custom duties paid by them (duty drawback) and cash incentives. These incentives are small when compared to a six rupee increase per dollar of export earning. As the dollar rate dipped to sub-70 levels exporters came under pressure. Overall exports contracted during the last quarter for many reasons, exchange rate being one of them. There was an immediate need to protect exports now.

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RBI does not target any particular exchange rate level for the rupee. However, one of its main objectives is to ensure stability in the exchange markets and prevent excessive volatility. The fall in Dollar-Rupee rate from October to now is 7.25%. In the last 5 weeks alone (8th February to 15th March, 2019) it has fallen by 3.76%. 

Higher inflows of Dollars has resulted in excess supply leading to fall in its value. RBI has many concerns and liquidity as well as stability of exchange rates are among them. Further surge in dollar inflows is expected in the coming weeks due to perceived succession by a stable government after elections and softening of cross border tensions. Liquidity is like blood pressure. High blood pressure is dangerous. Low blood pressure is even more dangerous. Same goes for volatility in exchange market price levels. Dollar at 74 rupees was worrisome; same at 68 as well. RBI has to manage both liquidity as well as stability in exchange markets. 

*****

Can it kill two birds with one stone? The sudden announcement of Dollar-Rupee swap is one such action by the regulator. The swap comprises buying spot dollars and selling three years forward dollars. For a common man, spot means here and now. But in exchange and security markets, due to time difference across the globe as well as other reasons, date of entering into a transaction and actual delivery can be different. What is a swap? A swap is simultaneous purchase and sale of the same item, but for different maturities. Item purchased and sold is the same but delivery dates differ. RBI plans to purchase 5 billion US Dollars now and sell the same three years later. Three years is a long time in the exchange market time line. This swap will result in increasing foreign exchange reserves by 5 billion dollars. At the same time, 35,000 crore rupees will be pumped into the markets to address liquidity concerns. Both these happen immediately.

This action of RBI is expected to stabilise Dollar-Rupee rate around 70 rupees. It will also bring down OMO by 35,000 crore rupees. Hedging costs for foreign investors is expected to come down encouraging further dollar inflows. There may be some costs for the RBI in this process. But the benefits could be considerable. New problems may arise, but new solutions will be found. The cycle marches on....

This combination of politics, economics, domestic and foreign exchange markets is very interesting. Isn't it?