Lekha Chakraborty interpreted the latest inflationary issues’ impact on the Indian rupee. This professor at the National Institute of Public Finance and Policy in New Delhi, India, also gave her recommendations to the Indian Government.
We understand that the world is considerably affected by rising inflation rates, and foreign currencies like the Indian rupee are also greatly impacted. We believe this report will enlighten our readers on the latest developments regarding India’s official currency.
According to the news posted online by India-based news company The New Indian Express, Chakraborty pointed out that the mounting inflation rate would hurt India’s impoverished citizens.
She suggested the Indian Government strengthen its food security measures and social security networks to safeguard the poor people from soaring inflation. Last month, India registered a 7.8-percent inflation rate.
This April 2022 figure is much higher than the upper limit of the Reserve Bank of India’s range set for the month. The combined beverages and food baskets have a weight of 45.86 percent in the Consumer Price Index or CPI.
In April, there was a more-than-8-percent rise in food items, according to the information India’s Ministry of Statistics and Programme Implementation released. Fats and oil costs recorded a growth of more than 17 percent, and vegetable prices witnessed a 15-percent year-on-year surge.
Furthermore, fuel costs skyrocketed in recent months. They registered a 10.8-percent increase last month.
With these events involving high inflation, the Indian rupee nosedived to a record low of 77.63 Indian rupees against the US dollar last week.
At the time of writing, US$1 is equivalent to 77.50 Indian rupees, based on the foreign exchange information posted on Xe.com. Foreign exchange experts, including Chakraborty, remarked that the pressure would further mount on India’s official currency due to inflation they described as a matter of concern.
Deepanshu Mohan is an associate professor and the Centre for New Economics Studies director at the OP Jindal Global University’s Jindal School of Liberal Arts and Humanities. With the rising inflation and the Indian rupee’s devaluation against the US dollar, he relayed that achieving inclusive economic recovery would be difficult for the Indian government.
Mohan mentioned that wages were low, the unemployment rate was already high, and aggregate demand was already weak even before the coronavirus or COVID-19 pandemic hit India in early 2020. He explained that these factors make the path for inclusive economic recovery challenging with inflation’s added burden.
We find the problem of the Indian rupee getting devaluated versus the US dollar concerning. After all, this incident comes as soaring inflation rates beset Indian consumers.
We agree with Professor Lekha Chakraborty. We think India’s central bank, the Reserve Bank of India, should intervene sooner to address the rising inflation rate problem that appears unbridled and adversely impacts the Indian rupee’s value vis-à-vis the US dollar.
We also think India’s central bank should have been alert early, mindful that international inflation has skyrocketed in recent months.