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India into Another Trouble: IIP Downgrade
By siliconindia
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Wednesday, 14 December 2011, 02:13 IST |
2 Comments
3. Shoppers/ producer/exporter:
For shoppers this could be a blessing in disguise as the poor demand for goods and services could prompt manufacturers to offer discounts and freebies to attract shoppers to stores. For businesses using locally-priced inputs, there might be a silver lining in terms of costs, which could come down. However, if the prices of those inputs are based on international prices, they might not be so lucky because a falling rupee will increase prices in local terms. It's a double whammy: they have to deal with falling demand and rising costs. Declining industrial output will also mean lower exports. Only late last week, Commerce Secretary Rahul Khullar said exports in November crawled by 3.7 percent, the lowest pace in two years. That will increase pressure on the rupee (lower exports against higher imports, which increases demand for foreign exchange), which already dived to a new lifetime low of 53.14 against the dollar on Tuesday on the back of abysmal IIP data.
