News / Economy

    Falling Rupee Adds to India’s Economic Woes

    Falling Rupee Adds to India’s Economic Woesi
    X
    July 22, 2013 11:32 AM
    India's currency -- the rupee -- has fallen to an all time low in recent weeks, putting pressure on nearly every facet of the once booming economy. VOA New Delhi correspondent Aru Pande has more on how this depreciation is affecting many who are already hurt by the country's high inflation rate.
    Aru Pande
    India's currency - the rupee - has fallen to an all time low in recent weeks, putting pressure on nearly every facet of the once booming economy.  The depreciation is affecting many who are already hurt by the country's high inflation rate.
     
    New Delhi resident Jaskaran Lamba knew pursuing a Masters in Public Administration at Columbia University in New York would be expensive.

    What he did not count on was a 13 percent drop in the rupee’s value in just two months to reach a record low of 60 against the U.S. dollar.
     
    The additional financial burden has made him second guess whether starting the two year program in September will be worth it.

    “The fact remains that I am going to pay $100,000 and if that $100,000 means a difference of five rupees, that’s straight five lakhs [500,000 rupees or $8,500]. Even if I take a loan or my parents are funding me, that’s a difference of five lakhs to them or to me from my savings,” Lamba stated.

    He is not alone. Effects of the rupee’s depreciation will spread across much of the Indian economy, with most people eventually feeling the pinch.
     
    Not only will imports, such as electronics and auto parts, be more expensive - but fuel costs will likely also go up.  India is the world’s fourth largest importer of oil - relying on imports for 80 percent of its crude needs.
     
    Rising fuel prices means higher transportation costs that will hit consumers already dealing with high food inflation.

    India is not alone in seeing its currency depreciate - other emerging markets like Brazil and South Africa have also been affected by the strengthening of the dollar. But economists here say the rupee was already under pressure from a high fiscal deficit, untamable inflation and a lack of foreign direct investment.
     
    The falling rupee could help Indian exports by making them cheaper. But N. R. Bhanamurthy with the New Delhi-based National Institute of Public Finance and Policy said that is likely not enough to overcome many of the challenges that foreign companies face doing business in India.
     
     “I think it’s very important for the government to bring in more growth-oriented policies so that you attract more investment. In fact, you can control the domestic capital going out. For the last two to three months, there is a trend that domestic capital is going out,” said Bhanamurthy.

    Whether it was dealing with bureaucracy or bribes, Anant Dehadrai saw firsthand the hurdles foreign companies face as a former head of a Japanese firm in India and now an investor in India’s health system. “If I have an opportunity to be in India or somewhere else, I would rather go somewhere else," Dehadrai stated. "Where it’s so much easier to do business. At the end of the day, I want to optimize my profits. Why should I come here?”

    With two children living abroad, including a son who just finished law school in the United States, Dehadrai is acutely aware of the effect of the rupee’s depreciation.

    He remembers paying 40 rupees against the dollar and hopes those days and that of India’s economic prosperity are not a thing of the past.

    You May Like

    California Republicans Mull Choices in Presidential Race

    Ted Cruz tells state's Republican Convention delegates campaign will be 'battle on the ground, district by district by district,' ahead of June 7 primary

    Video Kurdish Football Team Helps War-Torn City Cope

    With conflict still raging across much of Turkey’s predominantly Kurdish southeast, many Kurds are trying to escape turmoil by focusing on success of football team Amedspor

    South African Company Designs Unique Solar Cooker

    Two-man team of solar power technologists introduces Sol4, hot plate that heats up so fast it’s like cooking with gas or electricity

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Turkish Kurd Islamist Rally Stokes Tensionsi
    X
    April 29, 2016 12:28 AM
    In a sign of the rising power of Islamists in Turkey, more than 100,000 people recently gathered in Diyarbakir, the main city in Turkey’s predominantly Kurdish southeast, to mark the birthday of the Prophet Muhammad. The gathering highlighted tensions with the pro-secular Kurdish nationalist movement. Dorian Jones reports from Diyarbakir.
    Video

    Video Turkish Kurd Islamist Rally Stokes Tensions

    In a sign of the rising power of Islamists in Turkey, more than 100,000 people recently gathered in Diyarbakir, the main city in Turkey’s predominantly Kurdish southeast, to mark the birthday of the Prophet Muhammad. The gathering highlighted tensions with the pro-secular Kurdish nationalist movement. Dorian Jones reports from Diyarbakir.
    Video

    Video Pakistani School Helps Slum Kids

    Master Mohammad Ayub runs a makeshift school in a public park in Islamabad. Thousands of poor children have benefited from his services over the years, but, as VOA's Ayesha Tanzeem reports, roughly 25 million school-age youths don't get an education in Pakistan.
    Video

    Video Florida’s Weeki Wachee ‘Mermaids’ Make a Splash

    Since 1947, ‘mermaids’ have fascinated tourists at central Florida’s Weeki Wachee Springs State Park with their fluid movements and synchronized ballet. Performing underwater has its challenges, including cold temperatures and a steady current, as VOA’s Lin Yang and Joseph Mok report.
    Video

    Video Somali, African Union Forces Face Resurgent Al-Shabab

    The Islamic State terror group claimed its first attack in Somalia earlier this week, though the claim has not been verified by forces on the ground. Meanwhile, al-Shabab militants have stepped up their attacks as Somalia prepares for elections later this year. Henry Ridgwell reports there are growing frustrations among Somalia’s Western backers over the country’s slow progress in forming its own armed forces to establish security after 25 years of chaos.
    Video

    Video Bangladesh Targeted Killings Spark Wave of Fear

    People in Bangladesh’s capital are expressing deep concern over the brutal attacks that have killed secular blogger, and most recently a gay rights activist and an employee of the U.S. embassy. Xulhaz Mannan, an embassy protocol officer and the editor of the country’s only gay and transgender magazine Roopban; and his friend Mehboob Rabbi Tanoy, a gay rights activist, were hacked to death by five attackers in Mannan’s Dhaka home earlier this month.
    Video

    Video Documentary Tells Tale of Chernobyl Returnees

    Ukraine this week is marking the 30th anniversary of the world's worst nuclear accident, at the Chernobyl nuclear power plant. Soviet officials at first said little about the accident, but later evacuated a 2,600-square-kilometer "exclusion zone." Some people, though, came back. American directors Holly Morris and Anne Bogart created a documentary about this faithful and brave community. VOA's Tetiana Kharchenko reports from New York on "The Babushkas of Chernobyl." Carol Pearson narrates.
    Video

    Video Nigerians Feel Bite of Buhari Economic Policy

    Despite the global drop in the price of oil, Nigerian President Muhammadu Buhari has refused to allow the country's currency to devalue, leading to a shortage of foreign exchange. Chris Stein reports from Lagos businessmen and consumers are feeling the impact as the country deals with a severe fuel shortage.
    Video

    Video  Return to the Wild

    There’s a growing trend in the United States to let old or underused golf courses revert back to nature. But as Erika Celeste reports from one parcel in Grafton, Ohio, converting 39 hectares of land back to green space is a lot more complicated than just not mowing the fairway.
    Video

    Video West Urges Unity in Libya as Migrant Numbers Soar

    The Italian government says a NATO-led mission aimed at stemming the flow of migrants from Libya to Europe could be up and running by July. There are concerns that the number of migrants could soar as the route through Greece and the Balkans remains blocked. Western powers say the political chaos in Libya is being exploited by people smugglers — and they are pressuring rival groups to come together under the new unity government. VOA's Henry Ridgwell reports.
    Video

    Video Russia’s TV Rain Swims Against Tide in Sea of Kremlin Propaganda

    Russia’s media freedoms have been gradually eroded under President Vladimir Putin as his government has increased state ownership, influence, and restrictions on critical reporting. Television, where most Russians get their news, has been the main target and is now almost completely state controlled. But in the Russian capital, TV Rain stands out as an island in a sea of Kremlin propaganda.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.8769
    JPY
    USD
    107.28
    GBP
    USD
    0.6842
    CAD
    USD
    1.2528
    INR
    USD
    66.384

    Rates may not be current.