Hyderabad, August 30 (INN): Describing the devaluation of rupee as the darkest period of Indian economy after independence, the Bharatiya Janata Party on Friday demanded that the Congress-led UPA Government issue a White Paper initiate a national debate on the issue.
In his open letter to Prime Minister Dr Manmohan Singh, BJP National Vice-President Bandaru Dattatreyya said that a anational consensus was needed to seek recovery solutions and national policies need to be reviewed to avoid or anticipate such eventuality in future. “The historic devaluation of the Indian rupee to Rs 68.80 per US Dollar signals the decline of the mighty Indian economy,” he said.
“As an economist, you are aware that devaluation of the Indian rupee leads to inflation. In turn, inflation reduces the purchasing power of the middle class. As a result, the slowdown of demand impacts manufacturing and then after employment. This cascading effect reduces our growth rate and national standing in the comity of nations,” Dattatreyya said.
The BJP leader said that the devaluation of the Indian rupee has a wide range of implications. At the nation level, the cost of imports shall upwardly spiral. Oil imports being substantial the burden shall affect the cost of goods and services taking them far beyond the affordability levels of the common man. The Oil imports in Rupee terms has increased to 5676.7 crores according to ASSOCHAM. Similarly, the increase in cost of imported coal and coke shall push the cost of power generation thereby adding burden on the cost of manufacturing and on consumers, he said.
The imported cost of vegetable oils and other raw materials for manufacturing shall make the finished products non competitive. For instance, the global prices of vegetable oils have declined to $ 157.6 per metric ton but the cost per metric ton has increased by Rs 6941.6 per metric ton as per ASSOCHAM report.
Dattatreyya said that the declining value of the Indian rupee shall make our foreign currency debt more costly and even dent our repayment records to the international funding agencies. Several high value and critical infrastructure projects could be effected due to lack necessary funds. This in turn effects the growth of the economy.
The youth eager for higher studies abroad will suffer as a result of the costly dollar. It is to be noted that more than 250,000 Indian students are seeking higher education abroad. In US alone, more than 47,000 students are from Andhra Pradesh. The agricultural sector would be affected due to the increase of imported fertilizers.