The Commerce Minister, Mr. Kamal Nath has written to the Prime Minister to do something about the appreciating rupee. One dollar fetched Rs. 45 a year back but is now worth only about Rs. 40, an appreciation of over 8%. Normally the Reserve Bank or RBI would keep the rupee down by buying dollars in the market and increasing money supply but is unable to do so now because of the high inflation. It has increased interest rates six times in the past one year to bring down inflation but is unable to control liquidity. With so much black money sloshing around controlling liquidity is proving to be impossible. Increasing interest rates will increase the cost of borrowing and hurt the middle classes. Handicapped from all sides the RbI is letting the rupee appreciate hoping that this will control inflation by bringing down costs of imports. This is already causing howls of anguish from the export industries such garments, jewelery and software. The picture is made more interesting by the fact that nine states are up for elections to state assemblies in the next two years and general elections are due in 2009. Gujarat is holding elections this year, Delhi and Rajasthan in 2008, Maharashtra, Karnataka and Andhra in 2009. Elections mean huge spending by candidates for canvassing and dirty tricks which has to be in cash which means liquidity will be out of control for at least two years. I wonder if anyone knows what to do. I have a feeling that things are going to be ' Ram Bharose ' which means God help us.