Appreciating rupee have created a miserable condition of the importers. It increases the cost of goods. This happens even though there is no rise in the cost of raw material. This rise in the value of goods is transfered to the consumers
THE MOVEMENT of dollar against rupee controls the profit margins of the importers and the exports. A great volatility is seen the movement of the exchange rate in the recent past. The recent gain the value of the dollar have sent a high voltage current in the importer community. The dollar breached the Rs 47/dollar on September 29.
In this festival season, such appreciation in the dollar value will dampen the spirit of the people. The natural result will be seen the sale of the festival goods. All the imported goods will be dearer, this season. Generally, the Diwali festival sees number of offers, discounts on various commodities. This season will not be the same. Big players in the consumer electronics segment are expected to hike the prices by about 5 to 10 per cent.
The global financial slow down is spreading its virus in the electronics segment now. Foreign institutional investors (FIIs) withdrawal from the Indian market have added fuel to the fire. This have further appreciated the dollar value. The rupee is presently standing at five year low. This the effect of global melt down on the emerging market! Time will decide, how deeper the cut will be. There is no change in the input cost of the major electronics goods makers. However the rupee depreciation will rule the selling price. This is because India is net importer of the electronics gadgets.
To overcame this type of situation in future, India has to built few more Videocon. It is the home grown industry that can built protective wall against the undesired things happening around the world. Ultimately everything drains down to government polices. How well does it nurture the its entrepreneur, how good facilities does it provide for there growth and establishment is to seen. Entire worlds attention is on India and China. The performance of these economies in this crunch situation, will decide there position 10-15 years hence. This is time it will lay the foundation of it being a developed nation.
Apart from the appreciating dollar, the second thing, which is affecting the sleep of the Reserve Bank of India and finance mininster is inflation. It is still in the 12-plus zone. Although the speculations are that it has peaked and it will subside are floating the market, the figure does seems that it is out of reach of everyone. The big companies learn to survive the tough situation after a dent in the profits, it the common man of the nation who have to pay the price. The inflation figure won’t see a sudden deep, the policies have to be devised so that it at least placed on the downward trend. Hope India’s growth story is least affected by this credit crunch situation.
