INCREASING DOMESTIC INVESTMENTS AND EMPLOYMENT

     In my earlier blog articles I had stated the role of the Central Bank of a country in regulating the large and almost unaccounted wealth held in different parts of the country. These wealth are by nature of no use to the larger part of the population nor are of any great value to the nation if it remains in its present forms. Hence, there is a need to monetize these wealth such that the citizens and future posterity can gain out of it. I had stated that the RBI (Reserve Bank of India) as the Custodian 2 of the wealth hidden or better still not circulated through the system of network of banking in the country. For any person this may at first sound something like a way off the mark argument yet when goes and study the ways and means other countries in particular the US has been able to successfully park its dollar reserves in other countries this may not be all that silly.
     The US economy for the most part of its free existence has been a regime of profligacy banking on the idea that other countries would save for it while it can achieve and enjoy the best of the standards of living. This idea was given an impetus whether the US electorate knew or not mainly because there were several communist countries with closed economies and centrally controlled economy. These countries were short almost anything and had to buy from US either in gold or something of value (barter) or in dollars. Naturally, the ever vigilant US stepped in and agreed to finance their imports by giving them loan in US dollar as the US wouldn't want the currencies of these countries which in most parts were of no use to it or to its European and free economy partners. Overtime, this lead to globalization which in essence means dollarization and the US dollar became the most accepted currency after gold in the international market. This meant that the US domestic economy was well taken care of by a robust private sector while it financed its international trade simply by paying in US dollars which in short means that the US went on printing more Ben Franklin green notes ( US dollar ) while the rest of the world have to rush and sweat it out to fulfill obligations in the form of goods, services or gold or US dollar advances. In fact, perhaps the most lucrative of all the US businesses was the printing of dollar notes. Obviously, this boomeranged as it was not quite the fundamentals of a true economical pattern. The irony of it all is that countries like China, India and many other emerging economies have hundreds of billions of these US dollars of which they now feel a lot more uncomfortable than they were a few years back. Many do not have the fairest idea of what to do with it.
        Now what has that got to do with the article that I had written a few days back you might as well ask. Well, it is through experience and observing things around you that the best of the business and economical ideas surface.To make it short in the example set by the US it is quite likely that countries are good place to park temporarily useless notes backed on the idea that things may turn around as always and recession would vanish once more. So long as they don't dump the foreign currency at throw away rates then of course the dollar would plummet and the US economy would be in total jeopardy. However, if we were to believe that this would have political repercussions and other countries remain holding on to their US dollars with earnest as displayed earlier, then things wouldn't be that bad for the US economy.
        Now my idea is that if we were to park some of the excess notes printed by the RBI while monetizing the wealth lying within our country then there is no doubt that it could remain locked up for long projects that stretches for two decades or more. The more years  the better. With the RBI having got the custodian rights for 99 years then this wouldn't be a problem in the long run fiscal term. Again, in the meantime the RBI can bring to monitor the money that is being funded for these long term projects by naming them explicitly as 'Specific Project Funds'. Even in case some of these do go into the circulation as they inevitably would do the RBI can put controls over its note printing to monitor whatever inflation that a possible fall out may occur. Of course, some mechanism can be devised that can always prevent this money to circulate simultaneously with the mainstream money with the help from the other commercial banks. Here,  we are not even parking the money in some other country which can prove to be risky, but are in the process of creating wealth within the country itself for investments and employment. One can name this particular segment of the economy as 'Segment B' for easy management and deployment of such funds.

ECONOMIC JUSTIFICATION OF THE WEALTH OF THE NATION

     Temple assets are public property and this has been reported in number of newspapers and holds somewhat true as far as the Lord Padmanabha Temple of Thiruvanathapuram in Kerala is concerned. The idea seems to have been articulated by different political parties across the state with a degree of variations as to who shall be the trustee and as to who shall manage such an enormous treasure found in the hidden secret vaults of the temple. What is most disturbing is the way crass politics and political opportunism is seen entering into the scene sidetracking good economics and proper management of wealth for productive usages. Suggestions vary more to tow the political party way of thinking rather than the benefit the wealth can benefit the State population and the country as a whole. There is no doubt that a trust can be formed and should be formed with members of duly elected representative of the temple as well as those who come to worship and receive blessings of the Lord taking into consideration that this cuts across the Hindu chaste reservations too. Once, such a trust is formed then it is the duty of the trust to see that the wealth is put into good use and for productive purposes.
       However, when one looks into the larger picture a trust is good so far as the actual custodian of the wealth is concerned, but looking at it from the view point of good economics the trust and its activities are likely to aggrandize the fortune it holds on to with its more charitable activities. I am not saying that charitable activities ought to be avoided, but there is limitation that this charitable activity can look after the larger public interest or the community particularly the Hindu community to whom the wealth of one lac crores or 100 billion dollars worth belongs. This is to emphasize the point that there is nothing to compare the system of channeling funds through the network of Indian banking even though the trust in most of its transaction are using this safe method. What I wish to point out here is that this huge wealth as such has very little potential of becoming any use to a larger portion of the public and as such must be monetized both for transparency and safety. I have already stated this in my article in this site titled 'Monetizing of Wealth Lying within the Country' dated Sept 12th, 2011.
      If you have read the article then you would have realized the importance of banking system and in particular the role of the Reserve Bank of India to enact a mechanism by which the actual fund remains in the hands of the trust while the same is monetized by the Reserve Bank of India as the Custodian 2. In this instance, the sole act and responsibility of managing the wealth in terms of its proper economic perspective and utilization for the development of the country's resources and long term projects rests on the RBI. While this can never be true as far the trust is concerned for the wealth although could be utilized properly would be limited to a narrow spectrum of activities and definitely not on a sustaining basis or areas of large scale employment potential and raising of the standards of living for a larger portion of the populace.Again, periodical updates, refunds, structural monetary adjustments of such huge funds can only be possible through the auspices of the RBI alone even though the finance ministry may have the last word on it. When large funds are locked up in large projects requiring long periods for completion there wouldn't be any great impact on the routine monetary policies in force nor have any impact on the inflation.
       The case holds very true for even other heritage properties and wealth in the form of monuments like the Nizam's Wealth, Museum Wealth, Taj Mahal and  others. In many ways there is a greater chance of earning from monetizing the wealth for productive purposes while a generous amount can also be given to these trusts for maintaining and providing ample security for these wealth rather than pass the burden on to the tax payers.