With all the RBI’s policies to defend the rupee, from raising short term interest rates by 300 basis points to imposing capital controls, coming to naught, RBI governor Dr. Subba Rao has taken the radical step of replacing the Indian rupee with the ubiquitous onion to stem the domestic currency’s slide and regain parity with the dollar. A kg of onions will now replace Rs. 100 as legal tender all over the country and more importantly fetch a dollar in the foreign exchange markets. Currency mints in Noida, Hyderabad, Mumbai and Kolkata have accordingly been converted into onion farms.
The RBI governor revealed that this solution struck him after he noticed that both the dollar and a kilogram of onion were moving in tandem towards the Rs.100 mark while he was peering over market data. “After that, the solution pretty much unraveled itself in my mind,” a teary eyed Rao told The UnReal Times. “Anyway, with people now preferring to transact in onions rather than rupee notes, especially those carrying the signature of Dr. Manmohan Singh, the move was inevitable,” he added.
The commentariat including economists of various hues have by and large hailed the move. “This out of the box measure limits the ability of both the Union Government and the ISI to do long term damage to the economy by resorting to seigniorage (revenue from printing notes) to finance their schemes,” noted Dr. Vodoo Sen, a very famous economist.
The Finance Ministry has predictably lashed out at the RBI for this radical monetary intervention. “Where will we get the extra onions to now buy food-grains for implementing the Food Security Bill?” thundered Finance Minister Chidambaram. “Plunge a dagger into our heart but don’t take away our right to finance populist schemes by creating money out of thin air,” he wailed.
Union Rural Development Minister Jairam Ramesh was also glum on hearing about the move. “It’s back to the drawing board for us now to draw up revised guidelines for a DoT (Direct Onion Transfer) in place of a Direct Cash Transfer (DCT) program,” he remarked lugubriously. The radical monetary intervention has also poured cold water over the plans by Mylapore vaadhiyars for performing a grand sadabhishekam ceremony for the Indian rupee in anticipation of breaching the Rs 80/US Dollar mark.
Incoming RBI governor Dr. Raghuram Rajan has however criticized his predecessors’ move, terming it as extreme and unwarranted. “All Subba Rao had to do to resurrect the rupee was to have Sharad Pawar endorse the US dollar,” he said and left it at that.