Pros and Cons of Rupee Depreciation

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Today, India is suffering from Rupee depreciation and Stagflation which means low growth rate but high inflation. The Indian economy is just on the brink of going into another recession mode. The preliminary symptoms of this as we all see today is that certain commodities prices have gone up beyond imagination. The suffering Indian economy has induced more pressure on the common people. The major contributor to this situation is the rupee depreciation.

The Indian currency that is Rupee has fallen at a drastic rate as compared to the other currency that has caused a sense of panic in the Institutional Investors mind and they are withdrawing their money from the Indian stock market that is Sensex and Nifty. Due to the withdrawal of money, India is facing the bandwagon effect which has spread the fear amongst all other people. Rupee depreciation brings with itself a set of pros and cons with it. It do affect the general public but certain companies are  blooming with this situation and has provided some support to the Indian Economy.

Pros

  • Indian IT companies like Tata Consultancy Services (TCS), Infosys, Wipro are doing very well as they do have foreign clients which pay them in US Dollar. TCS for that fact has become the topmost company in India considering its market capital today.
  • Other companies like from the Pharmaceutical space have also been able to enjoy this crisis situation as they manufacture their medicines in India and sell it to the foreign countries.
  • The NRI are becoming richer as they get paid in US Dollars and when we scale that to Indian Rupee, it certainly works to their advantage.
  • The Tourism Industry is prospering as India become a cheaper holiday destination for the foreigners who are attracted to our countries diverse culture.

Cons

  • The Oil prices in India have gone up due to the rupee loosing its metal. The petrol in specific have reached a record level of Rs. 80/liter in certain states.
  • All the products that we import like Gold, their prices have made the common public cry.
  • Students who were interested in foreign studies or people who wanted to go for a foreign holiday have also been impacted and had to rethink on their plans.
  • Loans that were taken from the overseas bank, their repayment have become a problem for certain industrialists.

Though the Rupee Depreciation has a silver lining to it for some of the people out there but its impact on the whole country has been beyond imagination. It is high time that the Reserve Bank of India (RBI) and the Indian Government wake up from their deep slumber and take the necessary steps to curb the depreciating Rupee before it becomes catastrophic for the nation.

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