[Reader-list] Highlights of PM’s Independence Day speech - 198

[Kshmendra Kaul]

Dear Rakesh
 
I am sure this is as tiresome for you as it is for me and certainly would be so for other List members (as some have already commented on such to-and-fro exchanges). I will try to keep it simple.
 
1. INTRIGUED : At one place you ask me "can you also specify what are nominal rates and what are the nos. outside the brackets?" ....... At another place you comment "(the nos both outside brackets and also those mentioned as nominal rates), I dont' think there's any contradiction of those figures with that of the NCEUS report." ....... INTRIGUED........  If you did not understand the numbers how could you confirm non-contradiction with NCEUS report. INTRIGUED.
 
2. NOMINAL RATE : Official Currency Exchange Rate in the market at which transactions take place. 
 
3. Since figures are being quoted with a stretch between 2004-05 to 2007, I considered a band of Nominal Exchange Rates  from $1 = Rs 40 to $1 = Rs 48
 
4. Since I brought in a 2007 comment of a World Bank official about 80% below $2 per day, so I took the PPP factors reigning since 2007 with the range 2.65 to 2.74
 
5. CALCULATIONS: 
 
a. If Official (nominal) Exchange rate is $1= Rs 40 then under PPP (or International Dollar)
    $1 PPP = Rs 40 /  2.65 = Rs 15.09                (OR $1 PPP = Rs 40 / 2.74 = Rs 14.60)
    as REAL TRANSACTED RUPEES
 
b. If Official (nominal) Exchange rate is $1= Rs 48 then under PPP (or International Dollar)
    $1 PPP = Rs 48 /  2.65 = Rs 18.11                (OR $1 PPP = Rs 48 / 2.74 = Rs 17.52)
    as REAL TRANSACTED RUPEES
 
6. CALCULATIONS for WORLD BANK $2 figure (which is taken as a PPP value):
 
a. If Official (nominal) Exchange rate is $1= Rs 40 then under PPP (or International Dollar)
    $2 PPP = 2 x Rs 40 /  2.65 = Rs 30.19      (OR $2 PPP = 2 x Rs 40 / 2.74 = Rs 29.20)
    as REAL TRANSACTED RUPEES
 
b. If Official (nominal) Exchange rate is $1= Rs 48 then under PPP (or International Dollar)
    $2 PPP = 2 x Rs 48 /  2.65 = Rs 36.23      (OR $2 PPP = 2 x Rs 48 / 2.74 = Rs 35.04)
    as REAL TRANSACTED RUPEES
 
7. FROM ABOVE : There was no mistake in my typing. I had deduced the World Bank figure of $2 translates into Rs 29.19 to Rs 35 compared to the Rs 20 from NCEUS.   
 
You have the FREE CHOICE of taking the NCEUS figure of Rs 20 as being valid.
 
Hopefully this will be my last mail on this thread. 
 
Kshmendra
 
 
 
 
--- On Sun, 8/16/09, Rakesh Iyer <rakesh.rnbdj at gmail.com> wrote:


From: Rakesh Iyer <rakesh.rnbdj at gmail.com>
Subject: Re: [Reader-list] Highlights of PM’s Independence Day speech - 198
To: "Kshmendra Kaul" <kshmendra2005 at yahoo.com>
Cc: "Sarai Reader-list" <reader-list at sarai.net>
Date: Sunday, August 16, 2009, 9:03 PM


Dear Kshamendra

The problem is that the sources I did get for the PPP conversion (from dollars to rupees) have different datas. The one I got for petrol was stating that it was about Rs. 10 as per 2000 data, whereas there was one which stated that Rs. 13.60 as per 2007 data (Wikipedia source). Hence, you are right when you talk about my having chosen that value of Rs. 10. I chose it, as an unfortunate consequence, of not having proper info, taking the lowest value into account, to avoid any kind of bias in calculation. Hence also, I didn't mention the source. (Then again, the World Bank data I mentioned in one of my previous mails give a different rate of conversion). 

I think there is a mistake in your typing, or in your calculations, because the factor of conversion is 2.65-2.74 when you say "  For the International Dollar the factor in 2008 is generally reported as between 2.65 and 2.74 for the In Rs." whereas then you further add "$2 (under PPP) would therefore at worst be around Rs 35 (nominal rate Rs 48)  and Rs 29.19 (nominal rate Rs 40)." I think it's 12.65-12.74 you are talking about, please do reply, so that I can clarify. 

And from the figures you gave (the nos both outside brackets and also those mentioned as nominal rates), I dont' think there's any contradiction of those figures with that of the NCEUS report.

By the way, since I gave the World Bank figures, I would also specify the rate of conversion in that fact I gave:

Rs. 15 (rural areas): = $1.25 (PPP) then $1 (PPP) = Rs. 12
Rs. 21.6 (urban areas) = $1.25 (PPP) then $1 (PPP) = Rs. 17.28

I don't know which one to accept, but I take the lower limit as Rs. 12 for the moment. 

Just as clarification, can you also specify what are nominal rates and what are the nos. outside the brackets? 

Regards

Rakesh

P.S: I agree with you that World Bank gives data in PPP terms. But I also said that the PPP is itself in a controversy, as to whether it should be used or not.