Depreciation of Indian Rupee has only negative impact on the economy

Jan 16 • General • 257 Views • 10 Comments

Depreciation of Indian Rupee has only negative impact on Indian economy

Depreciation of Indian Rupee has only be concern of local citizen of country but not the people who run this country also known as political class. Read up the Impacts of Depreciation of Indian Rupee

Not only India it self is allowing depreciation of Indian rupee but Due to European financial crisis the value of Rupee has been depreciated which has resulted in an increase in the value of dollar. Thus, affecting the economy. The demand of dollar has increased in contrast to that of Rupee and has startled our economy. It has resulted in the depreciation of the Purchasing Power Parity (PPP). Depreciation of Indian Rupee has resulted in increase in inflation and thus, stagnant growth of the economy. Dollar is being appreciated among all the currencies including Rupee and has marked an increase in its buyers. These frailties and volatility among the European market is sure to have an impact in the entire Asian markets including India. Government would have to pay more in terms of Rupee for its imports. This would lead to rise in fiscal deficit which in turn will raise the level of inflation.

The exporters gain from the depreciation of Rupee as they get more of the local currency in exchange of the foreign one. The depreciating value of Rupee is like a boon to Indian IT sectors as it generates more than 80% of their revenue from overseas market and this will enhance their actual realization of revenue. Emigrants living outside India also benefits from this depreciation.

These days Dollar has touched mark of about Rs 63 and more than that , after all Money has become very cheap in India , I still remember days when a 25p coin could fetch you 1 Kg lady finger but now a kg of lady finger is bartered at 1$ even in India. All though IT companies and Real state is expected to increase further but our import bills will increase.

Weak Indian Rupee against Dollar

Rupee hits all time low against Dollar this year

One thing people are failing to understand  “who is responsible for this fall of Rupee” when India developed in this period is being claimed by government in daily advertisements. Thank God Mr Digvijay singh of congress is not thinking that BJP or L.K is responsible for this fall of rupee. Probably he knows that no one except Government of India being run by Congress is responsible for this apart from due increasing corruption and volatility in policies and too much announcement of free food for people have taken away zeal of people.

Depreciation of Indian Rupee started in 1962 when India was in fight with China and soon in 1965 when we fought with Pakistan to buy weapons , who says that we have developed Depreciation of Indian Rupee clearly indicates that our moral values have gone down down down and down with every passing day of Independence. On 15th of August 1947 an Indian rupee was equivalent to an American dollar 1 RS=1$ and  today its 1$=63 RS. How far it will go. Honestly honesty has dipped down and Rupee has been going down.

Who is responsible , we as a nation. We do not want to work and are increasing our dependency every day on United states.

Every government from Indira Gandhi has increased dependence on US for benefit and vote. Before 1947 we were only slaves of UK , today we are slave of US as well and many more countries. We are cake and every one wants to eat us.

Now Rs 60 is general rate of Dollar against Indian Rupee. India has lost a lot due to increasing corruption and lethargic government policies , investors have lost faith on Indian economy , American investors are gaining confidence on American economy and thus decrease in FII have added to block.

Everyday now a days dollar is appreciating against INR but  government is not in condition to check this loss as government is busy in fighting for its own survival. Mr Manmohan singh , our Prime minister once known as greatest economics and our finance minister another waste of human resource.

Depreciation of Indian rupee is cause of weak government policies for vote bank , no external factors are responsible for it other than weak and fragile government and its policies which have never been consistent and aligned with general people.

In last one month or I should say in second half of 2013 Dollar has appreciated by 15%-20% but government is busy in policies for its vote bank , Food security bill which will again bring down value of rupee by 20% .

Recent change in policy with BRIC nations including JAPAN & China has helped Indian Rupee to bounce back a little and INR appreciated and reached to Rs 63 for every dollar but Its difficult to say how long it will sustain here till Indian government policies will not be investors friendly and policy paralysis will not be over.

Elections are coming nearer and thus government policies are coming high on exchequer and schemes like that of MANREGA & Food for all has depreciated value of INR.  For implementation of these policies basic change which is must should be change in mental level of society. Indian population is too lethargic to use these policies. 50% of population in India work to eat and if they are being given free food then No one will work and country will loose 50% of human resource which was indulged in one or another sort of labor.

Our manufacturing sector is not that strong or organised that , If we increase basic skills of people then we can indulge every one in production process. India needs huge investment in manufacturing sector to implement these policies. Once we have enough investment in manufacturing segment then we may have benefit of these policies but these policies of government are pre mature and its only to get votes.

 

Considered good effects

Earning from exports will increase : Why do we fail to understand that any company which realizes that dollar has gone strong will re negotiate deals and whats total strength of our exports which will not be re negotiated but probably price of oil will not be re negotiated.

For any suggestion/query/response please leave a comment.

You may also like :

Related Posts

  • http://www.facebook.com/erketan.joshi Er Ketan Joshi

    Well know a day Indian currency really facing down the mark value because of our global exposure was really lay down and its effect to dollars it means dollars goes high in compare to rupee as we all know there is an value of an 1 cent but in India paise was really dis appear that the reason by which Indian currency go down and down And the result by this Dollar went to high position.
    If we want to enrich our rupee so we have to do something we have to develop our products, management,goverment. and know we get what we want only then we can enhance our currency rupee.

  • Rashmi Rani

    The sharp fall in rupee against the US dollar to global economic uncertainty and supply-demand mismatch.

    “The main reason for depreciation of rupee against the US dollar is uncertain global economic environment, particularly unfolding of eurozone sovereign debt crisis, which has impacted the level of foreign institutional investment flows in the foreign exchange market,”
    This a very instructive blog concerning the stipulation of Indian rupee as compared to foreign market values.

  • oishi chatterjee

    The value of currency of one country in a global market represents that whether a country is developed or a developing country. Certainly depreciation has lead to negative impact on our country. But why is this situation yet in India?
    India requires a large amount of oil , CNG gas and thus require to import from other countries where money is in dollar and definately we have to pay the double and it turns good for the exporters and brings a downfall to Indian economy.

  • http://www.facebook.com/divya.acharya.397 Divya Acharya

    it is an informative blog.

  • BHAVYA

    Yes.. definately depreciation in rupee has a negative impact on our economy…as value f dollar increases…n it also results in lesser purchasing power.The inflation n price rise in various commodities n constant increase in prices f petrol,diesel etc are all a result f dis depriciation in rupee.This article is a good source f knowledge.

  • http://www.facebook.com/psinha.289 Pallavi Sinha

    Indian economy is greatly affected by the regular deppreciation of Indian rupees opposite to american dollar.The price hike in petrol,diesel and lpg gas are all becoz of this.Article regarding this sensitive issue have allready focused all important point of it and providing major and important data which are good to know.

  • Mankeshwar Tripathi

    Yes, its right that depricaition in the Indian Rupee have a negative effect on the economy as the profit behind the activities goes down for the same amount that earlier have large profits. The above article is quite good and helpful to understand what the reason and effect of such depreciation at all.

  • https://www.google.com/profiles/113594845860551031925 Ankita Prajapati

    good article.. i think it will good or benefit for the IT sectors and for NRI’s..but also it will be bad for the blow to Indian importers and also negative impact on Indian students and travellers abroad…

  • http://www.facebook.com/rajivranjan11 Rajiv Ranjan

    Indian rupee recently depreciated to a new record low against US dollar, the rupee depreciation brings about a large change in economy. The fluctuations in Indian currency resulted in huge setback to Importers and Foreign Investors and good news for exporters. As rupee depreciates, the basic impact of it is noticed and felt on Import bill, Fiscal Slippage, Cost of Borrowing. Indian currency Exchange rate is based on domestic market conditions.
    #The main reason for the current Indian rupee depreciation:
    It is fundamentally because of the ongoing European crisis linked with crisis in domestic economy. Due to the current crisis in Europe, big banks, investors and financial institutions started selling euro and bought dollar, thus dollar appreciated against all major currencies including rupee. Domestic economy adds fuel to this crisis due to stagnant economic reforms and increasing current and fiscal deficits to the economy.
    Impact on Growth rate of India:
    In the last few weeks, the fall in Indian Rupee against the US dollar disappointed not only Indian Economy but also many importer and foreign
    Negative Impact on Indian Economy:
    The depreciation of Indian rupee leads to high Inflation and has great impact on imports, as India imports about 80% of its crude oil and the payment of these imports will be in terms of Indian currency. If rupee still continues to fall, then oil companies will be compelled to increase the fuel prices in order to compensate their loss. Thus the price of crude oil rises and making it much costlier which means importers will have to shed more to import same quantity of Crude Oil. This means higher the imports will result increase in fiscal deficit and would give rise to inflation, which is already a big problem for the Government. As India is under tremendous pressure of inflation and depreciation of Indian rupee makes it more difficult for Indian economy to grow. The higher import bills give rise to fiscal deficit and generate more problems for the Government. India imports products such as petroleum products, capital goods, chemicals, dyes, plastics, pharmaceuticals, iron and steel, uncut precious stones, fertilizers, pulp paper etc. Thus the price of these commodities rises as rupee falls. India will also have to make more payment in terms of rupee for obtaining their raw materials, in spite of drop in prices of global commodity due to depreciating of rupee against dollar. Oil companies already have noted the descent in the value of Indian rupee against the dollar which led them to increase prices of petrol. Not only oil but all other products and commodities are also very costly to import.

    • http://www.facebook.com/rajivranjan11 Rajiv Ranjan

      fine

« »

Close