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: A leading public sector company recently ran a big advertising campaign in the metros highlighting its annual turnover as a global player. What should surprise viewers is that the company has mentioned its turnover for an audience in India in US dollars only.

The advertisement is a neat enough indicator of how the rupee as a currency is gradually beginning to slip away from the radar of even Indian trade and business. No company in India now speaks of its numbers in rupees. Just as the public sector power company assumed on the billboard, the currency for dialogue within the economy is the dollar. So, even an average Indian citydweller is quite comfortable with the dollar when it comes to comparing the respective size of Indian companies on a billboard. He does not need the support of a rupee-based measure to do an effective ranking.

This is the result of the years of hothouse treatment of the rupee, which has neatly eroded its presence from the high street of global finance. Just notice, in any quarter as the corporate score cards tumble out, all listed companies including those which have very little exposure abroad and, of course, the big unlisted entities spell out their balancesheets in US dollar, following it up with the rupee. This has become so pervasive a shift; it has effectively demonstrated the impossible odds for the rupee to emerge as a possible global currency.

This was bound to happen. The rupee has failed to keep pace with the speed at which the economy has matured. Several columnists have argued from this forum about the need to hurry up with reforms in the forex markets, including setting up institutional mechanisms to trade in the rupee as well as broadening of the market for it to allow global entities to trade in it. That agenda has taken so long in coming through that it seems quite unlikely that the domestic entities would find the effort worthwhile to participate and thereby nurture the market for the rupee.

The scare about letting the currency of an economic powerhouse float has created alternatives that are now the medium of communication for business. If a company has to earn its sales revenue in one currency, park the working capital abroad in another currency, and then convert the same back to the domestic currency, and then if it has a presence abroad to revert to another currency—phew, that is a long list of conversions and consequent risk of loss.

There are other reasons, too, for not doing business in rupee. Companies, which go in for dual listing in Mumbai and abroad, find they are often shortchanged when they convert the Global Depository Receipts into rupee. This happens because of the policy stance of keeping up a weak rupee. There is, therefore, always a sustained clamour to allow unlisted companies to list abroad, finance ministry denials notwithstanding.

India, at the present pace, will, therefore, end up as the first economic powerhouse that does business without a comparable powerful currency. The result of this asymmetry is evident in the stunted growth of the banking sector and the decline of the rupee as a medium for trade and commerce from the global market.

The international liabilities and assets of banks in India, inclusive of both Indian and foreign banks stood at just $50.6 billion as on September 2007, according to the latest RBI statistics. This is just fractionally above one month’s foreign trade bill for India. Terms like one trillion dollar economy or at the other extreme measures like $2 a day as an indication of poverty shows the discourse is off the rupee standard by a long shot.

But even as the rupee by all accounts seems to have already lost the race, it has, of course, not hindered the Indian companies from moving to the foreign shores. They have adapted themselves to the dollar peg just as the export houses have done so for decades. The difference has also become formalised in economic literature on Asian currencies. Chinese companies for instance use the dollar standard and remnimbi to do business with the rest of the world, which the rest of the world too recognises. For confirmation, just check out how Asian business news regularly quote the remnimbi for Chinese companies. But on the same platforms it is rare to get a rupee quote for an Indian company. No wonder that Indian media too now uses the dollar to compare economic news.

Whither the rupee. The de facto capital account convertibility that is on hand makes the prospect for the rupee pretty narrow. Of course as the legal tender it will survive. But in a globalised economy it will be a clear back street boy useful only for retail and purely domestic operations, not even a exotic currency to bet on.