The fall of the rupee

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 time now.

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, with inflation under control and the Centre's continued effort to push reforms will prevent the rupee crash once again as it did last year.

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.

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