INFLUENCE OF NEW

RUPEE SYMBOL IN

INDIAN ECONOMY

Economic boom
It will become as globally recognised as signs for the dollar, the yen, the pound
and the euro.

Ministers made their final decision at a cabinet meeting after examining a

shortlist of five designs inspired by the letter "R" in the Roman alphabet and "Ra"
from the ancient Devanagari script used in Hindi.

"This establishes the arrival of the Indian currency as a robust currency on an

international platform and I think every Indian should be proud about it,"
AmbikaSoni, the minister for information, told reporters.

"Some of us in the cabinet tried to write it out and it is not difficult at all," she
said.

The rupee is currently referred to by the abbreviations "Rs", "Re" or "INR",

though it remains uncertain whether the new symbol will be widely taken up.

Udaya Kumar, a post-graduate student at the Indian Institute of Technology,

submitted the design which beat 3,000 other entries in a national competition to
win a cash prize of 250,000 rupees (5,350 dollars).

"The guidelines asked us to incorporate Indian culture and traditions, and be

suitable for computer keyboards," he told the NDTV news channel. "My design
has a horizontal line which also makes the tricolour of the Indian flag."

The government plans to introduce the symbol on computers shortly and to have
it in regular international use within two years.
India's economy has experienced rapid growth since liberalisation reforms in the
early 1990s reduced controls on foreign trade and investment, and the country is
widely forecast to become a global superpower.

The Indian government predicts the economy will grow by 8.5 percent this fiscal
year and should hit double-digit expansion within five years.

Residents in the Indian capital New Delhi welcomed the new symbol.

"This is the first time I am seeing it, and it looks good," MuskanDhawan, a 22-
year-old student, told AFP in Connaught Place, a shopping area in the centre of
the city.

"As an Indian I feel proud that we are doing this for our economy to be
recognised abroad," she said.

Other locals said it reminded them of the euro sign, and predicted it would soon
catch on.

"I haven't heard of it before, but as an accountant I think I will have to use it a
lot," said Menu Kumar, 24.

In India's financial capital Mumbai, RitikaMankar, an economist with investment

banking group Execution Noble described the symbol as unique and easily
identifiable.

What does the new Rupee symbol mean to a

layman?

With this, the Indian Rupee has joined the elite club of currencies like US Dollar,
British Pound, Japanese Yen and the Euro, which are the only other four
currencies in the world to have a distinct symbol.

At this juncture, the Government has no plans to print the symbol on currency
notes or coins. It will be included in the Unicode standard and in major scripts of
the world so that is displayed and printed in electronic and print media.

Many luminaries have chorused the view that the new symbol heralds India’s
arrival on the international scene and that the country is now ready to take on
the world. But are we? Is this statement more an aspiration than reality? What
does the new symbol mean to the common man? A reality check is essential.

First, economic progress in grand manner notwithstanding, a recent report by

Oxford Poverty and Human Development Initiative indicates that there are 421
million multi-dimensionally poor people in eight of the Indian states (Bihar,
Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh, and
West Bengal) as against 410 million poor people in 26 of the poorest African
countries.

The study uses different indicators of poverty such as health, housing, education,
nutrition, access to basic services like drinking water, sanitation, cooking fuel
and electricity.

This simply means the common man needs basic things first to be able to
appreciate and participate in India’s ascension to global biggie status.

Second, four currencies before the Indian Rupee opted for unique symbol in
order to distinguish themselves in global financial transactions. These four are
also the most freely convertible currencies in the world today.

Can you think of a major international financial transaction dealt in any other
currency other than these four? It’s a rarity. Where does Indian Rupee stack up
here? Indian Rupee is neither treated as a reserve currency nor is it as
convertible as these currencies, which simply means Indian Rupee does not carry
the same weight as the four currencies carrying a symbol today.

There is no doubt that the new Indian Rupee looks classy. It aptly represents our
cultural heritage. But it stops there. Everything else the symbol is intended is
statement of aspiration and seems far away from truth.

If the genius cartoonist R K Laxman was in good health he would have explained
in his typical inimitable style what the new Indian Rupee symbol means to the
common man.

Reflects strength of economy

The Indian rupee will soon have a distinct and identifiable symbol that would
reflect the strength of the over-trillion-dollar economy. The Indian currency will
now join an exclusive club of international currencies — the US dollar, the British
pound, the Japanese yen and the euro — that have their own symbols.

The new symbol, which is a blend of the Devanigiri ‘Ra' and roman ‘R', has been
designed by Bombay IIT post-graduate Mr D. Udaya Kumar and approved by the
Union Cabinet today. Mr Kumar's design was selected from amongst 3,000
entries received in a public competition. The entries were evaluated by a jury
headed by the RBI Deputy Governor.

Showcasing strength
“It's a big statement on the Indian currency.. It would lend a distinctive character
and identity to the currency and further highlight the strength and robustness of
the Indian economy as also a favoured destination for global investments,” Ms
AmbikaSoni, Information & Broadcasting Minister, told reporters after a Cabinet
meeting.
Ms Soni also said that the State Governments would be impressed upon to
encourage the use of the new Rupee symbol and proactively promote its use.
The symbol would better distinguish the Indian currency from those countries
whose currencies are also designated as Rupee or Rupiah, such as Pakistan,
Nepal, Sri Lanka and Indonesia, she added.

The Finance Minister, Mr Pranab Mukherjee said in a statement that India's

currency will now have a distinct identity that will be internationally recognised
at par with other international currencies like dollar, pound and yen.

The symbol will not be embossed or printed on currency notes or coins. There
will have to be changes to the software packages and keyboards to ensure
widespread usage of the symbol.

Unicode standard

Software industry experts feel that adoption of the new rupee symbol could take
up to 18-24 months. As a first step, the new symbol will have to be included in
the Unicode standard — an international encoding scheme used to uniquely
identify characters.

The symbol will also be included in the Indian standard – Indian script Code for
Information Interchange (ISCII). The ISCII specifies various codes for Indian
languages for processing on computers along with keyboard layouts.

Ms Soni said that the encoding of the symbol in Indian standards is likely to take
about six months.

After encoding of the symbol in the Unicode Standard and National Standard, the
Nasscom will approach software development companies for incorporating the
rupee symbol in their software, as a new programme or as an update. This will
enable computer users worldwide to use the symbol even if it is not embedded
on the keyboards. (much like the euro symbol, which is not embedded in the
keyboards in use in India).

When contacted, a Microsoft spokesperson said that “Once the Unicode

consortium gives its nod and vendors get notification of the same, we can
include the new symbol in the next release”.

For incorporating the symbol in the keyboards to be manufactured in India, the

Manufacturers' Association for Information Technology (MAIT) will ask its
members to make changes in the production process after the Bureau of Indian
Standard (BIS) notifies the symbol as the keyboard standard.
“Once the standards are frozen, it will take us one quarter to integrate the
changes in the hardware”, said a spokesperson from HCL Infosystems, a
computer maker.

A TVS Electronics official said that the company would just take a month to get
the new keyboards ready (either through a new key or conversion of a functional
key into a Rupee key).

With a new symbol, the issue of full capital account

convertibility will be revived again
Evoking national spirit and international attention the Indian rupee attained a new avatar in its
new symbol. A distinct identity with a blend of the Devanagri ‘Ra' and Roman ‘R', the Indian
currency will be joining the elite club of the U.S. dollar, the European euro, the British pound
sterling and the Japanese yen.

This would distinguish the Indian currency from its neighbouring countries' — Pakistan,
Nepal, Sri Lanka and Indonesia — similarly known rupee or rupiah.

While declaring the intention of the government to have a symbol for the Indian rupee, Union
Finance Minister Pranab Mukherjee had stated in his last budget presentation that: “We
intend to formalise a symbol for the Indian rupee, which reflects and captures the Indian
ethos and culture.

“With this, Indian rupee will join the select club of currencies such as the U.S. dollar, British
pound sterling, euro and the Japanese yen that have a clear distinguishing identity.”

Political dimension
The growth story of India is intact and many would be interested in correlating the new
symbol with its economic growth and ambition to become an economic super power.

However, the introduction of the new symbol is having a political dimension. While Pranab
Mukherjee spoke about ethos of the country in Parliament, it was definitely, on the largest
democracy of the world. As compared to other Asian powers, especially China, India's
strength lies in its democracy.

This new symbol is also considered as a step towards internationalisation of Indian rupee.

While the U.S. dollar, the British pound, the euro and the Japanese yen are widely traded
currencies, Indian rupee is only partially convertible.

Further, majority of world's currencies are also floating. Convertible currencies are defined as
currencies that are readily bought, sold and converted without the permission from a central
bank or government entity. The Indian rupee is only partially convertible as the central bank
controls the international investments flowing in and out of the country.

With a new symbol, the issue of full capital account convertibility would be revived again.
However, the recent global financial crisis again proved that India would not be able to take
such risks though one may say this as a weakness for the Indian currency in the global arena.

The Prime Minister, Manmohan Singh in a speech at the Reserve Bank of India (RBI) on
March 18, 2006, referred to the need to revisit the subject of capital account convertibility.
He had said: “Given the changes that have taken place over the last two decades, there is
merit in moving towards fuller capital account convertibility within a transparent
framework…I will therefore request the Finance Minister and the Reserve Bank to revisit the
subject and come out with a road map based on current realities”. Y. V. Reddy, the then
Governor of RBI, in consultation with the government, appointed on March 20, 2006, a
committee to set out the road map towards fuller capital account convertibility.

Capital flows
Volatile capital flows have been a central issue during the recent financial crisis, which
surfaced around 2007-08, and continue to be so now as the crisis is ebbing. Emerging market
economies (EMEs) saw a sudden stop and reversal of capital flows during the crisis as a
consequence of global deleveraging.

India has followed a consistent policy on capital account convertibility in general and on
capital account management in particular. “Our position is that capital account convertibility
is not a standalone objective but a means for higher and stable growth. We believe our
economy should traverse towards capital convertibility along a gradual path — the path itself
being recalibrated on a dynamic basis in response to domestic and global developments. Post-
crisis, that continues to be our policy. We will continue to move towards liberalising our
capital account, but we will revisit the road map to reflect the lessons of the crisis,” D.
Subbarao, Governor, RBI, stated recently.

Correlation
The recent crisis has clearly been a turning point in the world view on capital controls.

The Asian crisis of the mid-90s demonstrated the risk of instability inherent in a fully open
capital account. Even so, the intellectual orthodoxy continued to denounce controls on capital
flows as being inefficient and ineffective. The recent crisis saw, across emerging economies,
a rough correlation between the extent of openness of the capital account and the extent of
adverse impact of the crisis. Surely, said Dr. Subbarao “this should not be read as a
denouncement of open capital account, but a powerful demonstration of the tenet that
premature opening hurts more than it helps.”

Notably, the International Monetary Fund (IMF) published a policy note in February this year
that reversed its long held orthodoxy. The note has referred to certain ‘circumstances in
which capital controls can be a legitimate component of the policy response to surges in
capital flows'.
Now that there is agreement that controls can be ‘desirable and effective' in managing capital
flows in select circumstances. The Indian rupee is likely to remain a partially convertible
currency, at least in the near future as Dr. Subbarao put it: How emerging market economies
manage the impossible trinity — the impossibility of having an open capital account, a fixed
exchange rate and independent monetary policy — is going to have an impact on their
prospects for growth, price stability and financial stability.

Historically under the British Raj Indian rupee was fully convertible. While many starved and
famines hit the country, a small section was buying palaces and other assets in Europe.

Impacts on Indian & Foreign Economy

This new symbol is also considered as a step towards internationalisation of Indian rupee.

For the Indian rupee, which has grown in stature since economic and financial sector reforms
started in 1991, the new symbol comes at a time when it is in robust health. While many
major currencies, particularly the euro, have been battered by the storm in financial markets,
the rupee, controlled by the Reserve Bank of India, has remained steady. From an exchange
rate of 17.5 against the US dollar in 1990, when the country faced a severe balance of
payment crisis, the rupee is today at 46.21 against the dollar. India's foreign exchange
reserves are now at $279 billion, a stark contrast to March 1990, when the $3.96 billion of
reserves were sufficient only for three weeks’ worth of imports.

It has been twisted to recognise the growing economic linkages between India and the world
and to more emphasize the power and strength of the Indian economy as a privileged goal for
global investments.

The Indian rupee is trying to connect itself with the top four or five currencies and thus
exemplify its supremacy in world economics. The brand bent has to be sold properly, both to
Indians and the world. The rebranding is a sign of the bigger aspiration of India.

1. It could increase foreign investment in India.

2. It denotes the strength of Indian economy.

3. It may be new tax would be imposed on branches or subsidiaries or both of Indian and
other foreign banks in the UK.

4. Provoked by the growing influence of the Indian economy in the global arena, reflecting
the Indian ethos and culture.

5. The symbol should be applicable to standard keyboard in whole world.

6. It is unfortunate that India is always represented with Hindi everywhere. It will please to
position India as a multilingual country and give due credit to other Indian languages also by
help of Indian rupee symbol Ra.

By:
08SA129

IDDHI