Control spend

Falling rupee is loaded with many lessons


Kashmir Magazine

Sajjad Bazaz

Everybody seems to be shaken up with the depreciating value of rupee and the unprecedented rise in fuel prices. All this is impacting the common family budget. Even as the rupee fall has ignited political heat and triggered expert economic debates, a common feeling is brewing up among common masses that they are being cheated.

Weakening rupee in wallet or for that matter in digi-wallet is squeezing everybody’s financial strength and making the people poor for none of their fault. After every hammering against US dollar, three main questions always surface. What are the factors leading the rupee to fall against the US dollar? What should be done to control its fall and make it stable against the dollar? And what does the rupee losing value means to a common man?

Usually, answers to these questions are debated in the context of macro-economic issues like economic slowdown, impact on corporate earnings and market volatility. Hardly we find a mention of woes which a falling rupee brings into common man’s corridor. Even as corporate corridors face spurt in operating costs due to depreciating rupee, it’s finally the common man who faces the brunt directly as well as indirectly. Corporates directly pass on the rising production cost of products and services to the common masses who are their consumers. They load the burden on their consumers by revising the prices upwards.

There is also a huge indirect impact of the weakening rupee on the common man’s finances. The commodities such as crude oil, fertilisers, medicines and various kinds of imported raw material get costlier. Despite these products not being daily consumption products, leave a common man helplessly watching his normal family budget falling short of meeting even the routine demands.

For instance, a weak rupee triggers upward movement of petrol and diesel prices. Once the fuel prices are escalated, the transportation charges for transporting goods from one location to another equally go up. The burden of this rising cost in the transportation is met by the consumers.

One of the worst sufferers in the weakening rupee scenario is the student community. Many parents irrespective of their financial capabilities took (and continue to take) route of educational loan schemes to see their wards highly educated in foreign universities. Education loans are usually in rupees, but as students pay their expenses in a foreign currency, the cost of education has automatically gone up. The students stand stressed as managing finances to meet the shortfall is inevitable or they have to surrender their studies.

Mode of transportation has witnessed a sea change. The families are in a rush to own a car or a two wheeler or both. The scenario is such that every member pursues a dream to have his own car. For this, banks have been playing a major role as they have tailored auto loan schemes to woo even lower middle class section to avail loan for purchase of a car or a two wheeler. Now the depreciation of rupee has impacted the automobile sector also. Input costs have risen as there are companies using imported components. Some companies will have to pay higher royalty to foreign parent firms and some have foreign currency loans.

Experts have been suggesting measures to control the fall in rupee and bring stability in its value. But common people too have a major role to bail themselves out of the burden of the falling rupee. Simply, they have to cut down their expenses. Let them control their purchasing power which digital financial products have vested with them. There are certain purchases such as owning a car, which can be postponed. They can even cut down the use of car or two wheeler to save money otherwise used on fuel.

Most of the online shopping is not based on necessity. There are online commerce sites which sell products in dollars. This time the products would be expensive. Decrease in the usage of imported items like many foreign brands for clothing and electronics can help. So, they need to shelve their craze of online shopping, neutralize the buying of non-essential items for the moment and save for a rainy day.

Precisely, to help curb the fall in rupee, it is important to understand it and know how we can tackle it. It's time to introspect spending habits.

(The views are of the author & not the institution he works for) 


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