New Delhi: For Rajkumar Chibber, the downward spiral of the rupee means no holidays this year, no movies over the weekends and more frequent rides on a shared taxi instead of the family car.
“The falling rupee has led to a rise in prices of essential goods, with a direct impact on our household budget,” says Chibber, 41, who is a Delhi-based sales professional.
“We are already cutting down on entertainment and movies. Also this year, there will be no holidays. Now we opt for cab pooling or public transport in place of personal car,” he says.
With the rupee weakening every passing day and inflation showing no signs of slowing down, the problems of the common man have only got worse. Usually, the fall in the rupee brings up macro-economic matters such as slowing economic growth and market volatility, but this time the woes are not just limited to the corridors of the corporate sector. The sliding rupee is now hitting where it hurts the most — the pocket of the common man. While on the one hand, the weakening rupee is affecting essentials such as food and education, it is, on the other, making import items such as crude oil, iron ore, medicines and fertilisers costlier. Although these things are not for daily consumption, yet they affect everyone’s finances indirectly.
The falling rupee is also bad news for Indian vacationers in a foreign country.
“Airfares are going up due to an increase in fuel surcharge. The stay is costlier by at least two to five per cent. Also, shopping can become expensive by at least four per cent. Similarly, eating out is also costlier by almost the same percentage. With the rupee falling, the pay cheque may also shrink for some people. Basically, every industry which is dependent on imports is facing heat due to steep increase in cost of production,” 38-year-old banker Rajeev Srivastava makes a point.
Almost all banks have raised their lending rates. While consumers who have taken home loans on fixed interest rates are not affected, those with floating rates are certainly hit.
Due to increase in lending rates, Sunaina Shankar is a disturbed woman these days. With Rs40,000 per month in hand, she pays for the education of her children, looks after her elderly parents, and squeezes out an Equated Monthly Instalment (EMI) for her house in Haryana.
However, looking at the bright side, the falling rupee may get support from higher remittances from the Middle East and exporters willing to sell receivables. A lower rupee makes imports more expensive, but many see a silver lining in the rupee weakness on the ground that it improves competitiveness and thereby exports.
“The precipitous fall of the rupee is affecting everyone because a large number of components are being imported and also the fact that it is causing inflation. However, the information technology sector stands to gain in the present scenario. Plus it is definitely a good time for industries which earn in dollars,” said Ajit Anaskar, 46, an investment consultant from Mumbai.
Interestingly, the falling value of the rupee has resulted in increased overseas collections for Indian film producers. Studios in India now stand to make more money in rupees for every dollar earned.
Thirty-nine-year-old Mumbai-based film distributor Neeraj Manchanda admits that it is a golden time for distributors like him, who export Hindi movies overseas.
“One cannot ignore that net collection from overseas film market in US dollars will ultimately be converted to Indian rupees, which is bound to benefit from the latter’s depreciation. When compared to collections last year, such film distributors are getting around 10 per cent more on the conversion from dollars to rupees,” Manchanda said.
The Indian rupee has become a powerful metaphor for India’s rapidly sliding economy.
The rupee has triggered countless jokes and political mudslinging, and, like everything in India, it has generated astrological speculation, too.
Some economists blame the rupee’s recent misfortune on plans confirmed by the US Federal Reserve to begin scaling back its massive effort to stimulate the US economy, which has tended to keep the dollar weak compared with other currencies.
But some superstitious Indians have blamed the slump on the new symbol for the rupee, unveiled last year.
Experts on vastu shastra, an ancient Indian design practice similar to feng shui, say that the symbol debuted on a day inauspicious for the stars and that the horizontal line across the symbol appears to “slit the throat” of the currency.
— New York Times News Service