पोस्ट करनेवाले : sadiquetz
| Price when posted : BSE: Rs 111.30 ( -1.50 % ), NSE: Rs. 111.25 ( -1.46 % )|
High Oil Prices and Inflation
Even though Rupee depreciation benefits the NRIs, it is not good for the Indian economy. Pessimism about the growth of Indian economy, rising oil imports, widening current account deficits and reluctance of the RBI to intervene in the markets is contributing to the slide of the rupee.
Depreciating rupee raises the price of imports. Many companies depend on imported material for their production like automobiles, FMCG, tyres, and etc. The producers pass this on to the consumers. This will in turn push up the inflation rate, which is already high at 9.73%(October 2011 prices). Prices of cars, electronics, mobiles and computers will increase if the fall in rupee continues.
But what is going to hit the common man the most will be the rise in cost of petroleum products. Depreciating rupee will make the oil costlier to import. Oil price is already high in India and is fueling inflation. Therefore a further rise in oil prices will adversely affect the Indian economy.
Even though the weakening rupee is benefiting those working abroad, it is not particularly advantageous for the majority of the country. RBI needs to intervene aggressively to stem the fall of rupee. Earlier, when the rupee was around Rs. 51.80 against the dollar, some attempts were made by the RBI to buy dollar. But it is surprising that RBI is reluctant to enter the market at this crucial time.
The government together with the RBI must be pro-active to prevent further fall in rupee. The government must introduce new policies to bring optimism into the market and attract foreign investors. Without such actions our economy will be heading towards bad times, which we are not ready to face....