Indian Rupee Breaching the all time low 81 against USD is a Serious Cause of Concern

Indian Rupee Breaching the all time low 81 against USD is a Serious Cause of Concern 

The Indian Rupee breaching the all time low of 81 to a US Dollar last Friday (day before yesterday) is a Serious Cause of Concern over all for India. 

In fact after Russia-Ukraine war broke out in last February, the Indian Rupee is having a free fall, while RBI has been trying to arrest the free fall by blowing up the Forex Reserve, as per published reports, RBI is spending almost USD 11 billion of the Forex Reserves every month and already USD 90 billion Forex reserve has been blown up on last 8-months just to arrest the free fall of the INR against USD.

Such free fall of INR is going to put too much Inflationary Pressure on Indian Economy, as over a period time we have become an Import Oriented Economy. Other than some Agricultural Commodities and Dairy-Milk, we are not self-sufficient in anything and most of the things. 

Even in Vegetable Oil and Pulses in Agriculture we have to largely depend on Imports. Our BIggest weakness is import of Hydrocarbon Oil combined Vegetable Oil. For most of the Rawmaterials/Intermediates for manufacturing we are to a large extent dependent on Imports.

Other than the handful of Software Companies where we are strong in Export of Services, or say a few Pharma Companies ( they are also dependent on raw material imports ) our Exports are not that Strong, as Indian Exports are expensive for the World compared to China. 

As the Rupee gets extremely weaker against USD, that is corollary against Euro and other bigger Forex units, the Indian Stock Markets would head for bigger crash, as Foreign Investors would pull out there investments, 

Even strong domestic giants like Amul will have raw material cost pressure for Value Added Dairy Products (other than liquid milk) that is where the revenue is. Most of the raw materials ( other than milk derivatives) and packaging materials they may be using would be largely import dependent. It is a Serious Negative signal for the Indian Economy, can't be loosely left like that without policy corrections, otherwise we will keep depleting the Forex Reserve badly, not good for a 130+ crores Population based economy. It would be a very complex and vicious cycle to break. 

If interest, the Indian Express Article link is given below for further reading on it.
"https://indianexpress.com/article/business/market/rupee-breaches-81-policy-challenge-let-it-find-its-value-or-burn-forex-hike-rates-8169453/ " 


About the Author : Dr. Nimain Charan Biswal is a B.Sc.(Agri. Science and Technology), M.B.A. and Ph.D.(Management Area ) by qualifications; and he has 36+ years of work experience in both industrial and development sectors in diversified fields of social importance. He has been educated at Orissa University of Agriculture and Technology (OUAT)-Bhubaneswar, Institute of Rural Management Anand (IRMA) and Gujarat University (with Resource Support of IIM-Ahmedabad). He is further educated at IIM-Calcutta, XLRI-Jamshedpur, Apple Computer Industries and Spar Inc., USA. He has worked for reputed National and International Organizations in Senior/Top Management Capacities at Board level as well as Managing Director and CEO. He is a management expert covering extensive areas from management in industrial sectors, management in agriculture and dairy, development management to management of public systems. He is a prominent professional of India and known Internationally as well. He lives at Mumbai in India.


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