Bikky Khosla | 12 May, 2015
The fall of the Indian rupee in comparison to the US dollar
has raised concerns. In the new financial year, the currency has fallen nearly
3 percent, initially due to a rising, strong dollar and more recently triggered
by stock selling by overseas investors. Some experts fear that it may fall
further in the coming days and if it happens this could kickoff a fresh bout of
sell-offs in stocks, resulting in a cascading effect and laying to waste the
hopes of an economic revival.
But is the rupee slump a blessing in disguise? I think it is
true to some extent. First of all, the rupee is significantly overvalued and
the decline will increase the competitiveness of the economy; second, the
decline will help some sectors with heavy export earnings, such as IT and
pharmaceutical; third, Indians working outside India will send more dollars to
the country; and finally and most importantly, the weak rupee will provide some
much needed relief to the export sector, which is struggling for quite some
Having said this, I'm not in favor of a rupee slump, but the
point is that we have to try our best to make the best of this negative
development. Exports have been on downward spiral since December last year.
Overseas shipments have recorded a decline of 21 percent in March, the biggest
fall in the last six years. In the backdrop of this, the depreciating rupee
will certainly provide the sector some temporary relief from a terrible
feeling. In addition, inflation is under control and the Centre's continued
effort to push reforms will prevent the rupee crash once again as it did last
Meanwhile, there was a huge ruckus in the Parliament on Monday.
The Land Bill was introduced in the Lok Sabha, but the members of the Congress
party and some other parties staged a walkout. It has also been reported that
the Congress is working on multiple strategies to prevent the Goods and
Services Bill from being passed in the Rajya Sabha. If the decision is based on
their genuine desire to scrutinize the amended bill, they cannot be blamed
anyway, but if they do it only to undo the BJP, the public at large will not
have any sympathy for such a move.
I invite your feedback.