Rupee Plunge Creates Uncertainties Among Indian Corporate

By siliconindia | Tuesday, 20 August 2013, 13:22 Hrs

The cascading value of rupee is likely to impact the sectors like power, chemicals and steel the most since India imports considerable quantities of coal, iron-ore, and fertilizers. With a rise in import costs, the transportation costs increases leading to a rise in prices of raw materials and commodities. Many companies view this as a situation similar to the 2008-09 crises. “This is like the replay of the 2008-09 crisis. The only difference is that this time the government is groping in the dark and has no clue how to stop the slide,” said a CEO.

CEOs believe that a higher import duty on selected commodities, hike in diesel price and restriction in non-essential imports could be few of the initiatives the government should consider. Imposing tax on automobiles and electronic goods, removing short-term capital gains, resuming export of iron –ores and imposing a limit on coal imports are few reforms that the Indian industry expects the government to make.

While most of the Indians will suffer from the adversities, there will be few who will gain from the falling rupee. Depreciating rupee means appreciating dollar and so industries that earn in dollars will have profits from its businesses abroad. The Indians working in foreign countries transferring money to their families in India will enjoy the rare benefits.

The larger Indian mass could now only wait and expect the UPA government to take effective measures and prevent the Indian economy from being paralyzed and shutdown completely.