Rupee Plunge Creates Uncertainties Among Indian Corporate

Bangalore: The Indian economy has never been very comforting, but rupee falling to a record low of 63.13 a dollar is like a nightmare. It has left the Indian corporate in tension and the general public in shock. The free falling rupee could mean more stringent capital control measures coming from the government. While the Indian incorporations will have to face the direct hit, over time the common man will be impacted as well, reports Dev Chatterjee of Business Standard.

The CEOs of some top Indian companies believe that the current economic condition show Government’s inefficiency and inability to take proper measures. “We are paying for the last four years of inaction and absence of reforms. The government has spent a lot of money in loan waivers, NREGA (employment guarantee scheme) and Food Security Bill and all these populist measures have now added to the deficit. We are not opposing pro-poor moves. We are against populist measures. We should be treating the disease and not the symptom. Now is the time to change policies.” said Rahul Bajaj, chairman of Bajaj Auto. S Gopalakrishnan, CEO and executive vice-chairman of Infosys believes that it is high time the Indian government should pay heed to the actual problems such as preventing imports of coal and iron –ore when India already holds massive coal reserves.

While many top companies like Tata, Birla, Reliance Industries, Lanco and Adanis have huge exposure in foreign currency, many other Indian companies are immersed in loans from abroad without any forward cover. A slight change in the rupee could mean a world of change in the operations of these companies.

RBI has acted by imposing strict restrictions on Indian firms and individuals from investing abroad with a view of controlling outflow of Indian capital. It has also raised key interest rates and announced that banks should keep more funds in cash reserve ratio. However, CEOs view this as a futile attempt on preventing the downward slide of rupee against dollar.

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