Indian Rupee Has Fallen To Around Rs 80 Per Dollar, Will Lead To An Increase In Inflation And The Commodity Will Become Expensive In The Market – Rupee Depreciation
hear the news
The Indian rupee has fallen to around Rs 80 per dollar. This will lead to an increase in inflation and the commodity will become expensive in the market. This will make it costly for the general public to mobilize the essential commodities for survival and people may have to cut down on facilities to meet their needs. But at the same time, the fall of rupee makes Indian products cheap in the international market and that is why the export market benefits from the weakness of the rupee.
The biggest loss due to the fall of the rupee comes in the form of an increase in India’s trade deficit. India has to spend huge amount every year in the form of oil imports. After the depreciation of the rupee, the government has to pay a higher price to buy oil products of the same quantity. Due to costlier oil imports, consumers in the domestic market have to pay higher oil prices. This increases the cost of transportation of goods. Traders charge this price from the final consumers, due to which the prices of every essential commodity from food grains to clothes start rising and the consumers are hit by inflation.
but business grows
Ajay Shankar, former secretary in the central government, told Amar Ujala that there is a general understanding that a strong rupee is a sign of a country’s strength, while a weak rupee is a sign of a country’s weakness. But this assumption is not very correct. China and Japan deliberately allowed their currencies to devalue. This made their products cheap in the world market and these countries emerged as the world’s largest factories. The devaluation of the currency is one of the main reasons for the strengthening of their economy, among other reasons.
In this context, there is no harm in depreciating the rupee to a certain extent. This will increase India’s exports, this will increase production in the market and increase employment opportunities. But to take advantage of this situation, the government will have to create such conditions in different states, which will increase production and benefit the country.
No power to withhold Rs.
World market experience shows that when a country’s currency starts falling under pressure from the international market, the central bank is not able to handle it much. India’s Reserve Bank of India has so far spent about $ 41 billion in foreign exchange to prevent the rupee from falling, but the rupee is not taking the name of recovery even after this. It is estimated that it may prove to be unsuccessful in stopping the fall of the rupee even further. At the most, he may be able to slow down the pace of this decline somewhat.
why is rupee falling
When foreign investors suddenly start pulling the rupee back from the Indian market, then the rupee prices start falling rapidly. In this year alone, foreign investors have pulled out more than two billion dollars from the Indian stock market. This sequence continues. American-European central banks have increased their bank rates, investors are now seeing more returns from the Indian market in American banks, so they are withdrawing money from here and putting it back in their country. Its direct effect is visible in the prices of the rupee and the rupee is falling continuously. It may continue further.
Control inflation in this way
With the fall of the rupee, exports will get a boost, but with this, inflation also starts rising. It is necessary to give relief to the public, otherwise it will not get the right benefit. For this, the government should gradually bring petrol and diesel under GST. Due to this, the prices of petrol and diesel will not be more expensive than a limit, inflation will not increase due to non-rising of oil prices.
But most of the states including the Center are not ready to bring oil under GST, because the income from petrol and diesel goes directly to their account and their major expenditure comes out of this money. Governments should increase taxes on other items to meet their expenditure. This will increase the burden on the people of one sector, while bringing oil prices under GST will benefit every sector of the entire country.
India imports goods worth close to $98 billion per year from China alone. By imposing 10% import duty on this business alone, the government can earn close to 10 billion dollars. Similarly, the government had brought huge relief to the rich class by reducing the corporate tax at the time of Kovid, the government hoped that when the rich have more money in their pockets, they will invest and employment opportunities will increase in the economy in the Covid-hit era.
But it was seen that the rich did not invest this saving of tax money in new investments, not seeing the demand and profit in the market. The government should increase the tax by reintroducing this tax, but this benefit should be passed on to other sections in the form of petrol prices, so that inflation does not increase and the prices of the products remain cheap and it benefits the exporters.