The Indian rupee hit an all-time low against the US dollar yesterday. The macro-economic conditions across the globe and the debt sell-off by foreign institutional investors acted as major catalysts in the decline. Here’s a look at how it impacts the common man.
1. Fuel prices may go up, causing prices of transported goods to spiral
Crude oil accounts for a major share of India’s import bill. Import of crude oil will cost more. The state-owned oil marketing companies were already running on a deficit. The government backed them by announcing partial deregulation of diesel prices, while petrol prices are already market-driven. The additional burden of importing crude oil will be transferred to the consumers by the oil companies. Diesel and petrol prices are likely to go up.
This will also trigger a chain reaction that would result in a higher burden on the common man in all walks of life. Higher fuel prices would increase transportation charges, which would not only impact the office travel costs but also impact the price of the goods that are transported. Apart from crude oil, fertilizers and medicines are also imported in substantial volumes. The increased cost of importing fertilizers would also push the prices of food commodities higher. Medical care would also get costlier.
2. Foreign Education will get More Expensive
The US, UK, Australia and Europe are among popular destinations for Indian students for higher studies. The rupee has lost its value against all major currencies of the world. This means students will have to pay more in Indian rupees to fund their education now than they did earlier. Both current students and students with existing education loans should reassess their loan requirements.
3. Electronic, Electrical Items, Vehicles may get Costlier
With a flurry of electronic gadgets ranging from mobile phones, laptops and TVs available in the market, the manufacturers are forced to set a competitive price. The rupee depreciation would make the imports costlier, impacting the production cost of the manufacturers. Manufacturers would also look at hiking the price of these gadgets to match their profit margins. Car manufacturers also face a similar situation of increased operational costs. Car manufactures would also revise their prices upwards. Home appliance companies such as LG and Blue Star have already announced a hike in the prices of air conditioners and other items. Computer companies such as Lenovo and HP are also set to hike prices to offset the impact of a declining rupee.