If rupee slump persists, it can hurt India’s Modi

NEW DELHI/ MUMBAI: The rupee’s plunge to a record low has worried a wide cross-section of India’s society: companies, importers, those going on vacation and students planning to study overseas.

But if the weakness persists, Prime Minister Narendra Modi’s job could become a lot harder just before big state and national elections.

India is a big buyer of everything from crude oil and electronics to gold and edible oil, and its import bill was expected to cross US$ 600 billion in the fiscal year ending in March 2019, from about US$ 565 billion in the previous year.

The 9.3 per cent fall in the rupee this year has already led to a surge in local prices of goods with an imported component.

July was the ninth straight month in which India’s inflation was higher than the central bank’s medium-term target of 4 per cent.

The currency fell to a fresh low of 70.40 to the dollar on Thursday.

“The sharp rupee depreciation has come as a shock for us,” said Kamal Singh, 50, a senior government official in Delhi visiting family in the United States.

“Now I will have to spend at least 10,000 rupees ( US$ 143) more on travel.” Modi’s Bharatiya Janata Party ( BJP) considers urban middle-class Indians a key voting bloc, the segment most affected by the rupee depreciation. — Reuters