Indians despair as rupee sinks to low
From every note, the smiling, paternal visage of the Mahatma gazes back. People here have always been careful with their rupees, but perhaps now, they hold them a little tighter than before.
The headlines scream daily of India's economy in collapse, of a currency in freefall, having lost 15 per cent of its value this year, and 5 per cent in the past week.
But in the markets of Delhi, the discussion is far more prosaic.
Less concerned with currency fluctuations and deficits, the talk here is of the unseasonably high price of onions and tomatoes.
News of a "brainstorming session" by the finance minister - break out the butchers' paper - is seen here as busy work by a government that can't, or won't, find anything to actually staunch the economy's bleeding.
People are worried about an impending rise in the price of petrol, or electricity, and wondering if they can absorb another rise.
"Now, my family and I are spending double what I'm earning. Earlier, things were different and we were able to save some money," 42-year-old Omprakash Gupta said in a south Delhi market.
"The price of petrol and cooking gas is hurting us most. The rupee is going down in value compared to the dollar and the price of items are going up in the market."
India's rupee is Asia's worst performing currency this year, hitting a record low this week of 64.6 to the US dollar.
A quarter of its value has been wiped in two years, and it may fall further. Deutsche Bank has predicted it could touch 70 to the dollar in a month.
The cause is India's current account deficit, which, coupled with high inflation, low growth, and a stymied reform program, has sent foreign investors out of the market.
To reduce pressure on the rupee, the Reserve Bank has restricted how much citizens and companies can invest abroad, and has said it will inject $US1.3 billion into the country's banking system by buying long-term government bonds.
Most Indians feel little connection to foreign currency fluctuations or their central bank's manoeuvrings.
But the impact, realised or not, is being felt in the markets and at the kiranas, India's millions of owner-run corner shops.
Income levels have been rising in double digits in recent years, albeit from a low base. The average income is now $US90 a month.
But an estimated 400 million Indians still subsist on less than a dollar a day.
For these poor Indians, and for the "aspirational" class a step above them - those trying to break in to the bottom of India's already 300-million-strong middle class - even the smallest price rise has the potential to send them tumbling backwards, and they are vulnerable on several fronts.
A weak rupee means costlier crude oil, iron ore, coal, fertiliser, edible oil, and medicine, all of which India imports.
For the average consumer, that means food will be more expensive, because of higher transport and production costs.
Already, staples such as onions and tomatoes have experienced double-digit inflation because of poor harvests this year. This will be compounded by a weak currency.
The price of petrol is offset by costly government subsidies, but, as India moves towards deregulation, consumers will be hit by international oil price movements and the weakness of the rupee.
Power, too, unreliable as it is, will become more expensive. India imports millions of tonnes of coal a year to feed its growing power needs, and as these imports soak up rupees, that burden that will be passed on to consumers. But for now, the concerns remain the micro, not macro-economic.
"Everything is expensive now, but food and school fees are costing most," mother of four Kanti Saha said at her local market.
"A month ago, the price of onions was 20 rupees a kilogram, tomatoes were 30 rupees, and flour 20 rupees. But now onions are 80 rupees, tomatoes are 50 rupees and flour is 25 rupees.
"It is difficult to manage a household. Our income remains the same but expenditure continues to rise."
India's government is run by economist Manmohan Singh, but neither he, nor anybody else in the administration, appears to have any ready answers.
Despite the grim reality, Singh continues to issue positive declarations on India's prospects - "I believe that this phase of slow growth in India will not last long" - while steadily downgrading forecasts, and having to accept results even below that.
After a decade of growth at 9 and 10 per cent, the economy grew at just 5 per cent last year.
Finance Minister P. Chidambaram held a crisis meeting this week, promising, "we cannot allow the rupee to go into freefall".
But there is, as always, political hay to be made from any crisis. India is amid an undeclared election campaign and political observers can almost hear the opposition BJP whistling as the government stumbles to find a solution to its latest catastrophe. Narendra Modi, the BJP's presumptive prime ministerial candidate, was at his forthright, hyperbolic best: "the country is drowning in despair".