...Rupee Depreciation- Why is it depreciating? Describe the impact on India’s Macroeconomics. The depreciation of rupee against the dollar is not a recent phenomenon. If we see the valuation of rupee over the past six decades, i.e., post-independence, we can see a continuous downward trend. Though there have been temporary fluctuations in the value, the general trend has been negative. To find the root cause of this phenomenon we need to go 200 years back. Prior to the 18th century most of the economies around the world followed the Silver standard. But then these economies switched to the gold standard, due to the devaluation of Silver as the supply of Silver increased due to increased mining activities. But the British rulers of India did not allow the Indian currency to switch to the gold standard. This resulted in a structural weakness of the currency, which we can still feel to this day. Another landmark episode in the depreciation of the rupee was the 1991 liberalization reforms. Post the reforms the rupee was devalued and allowed to float against the dollar to make Indian exports competitive and shore up more dollars into our reserves. Although we have reaped the benefits of this devaluation for long, the current depreciation is hurting the economy. Now moving on to the recent volatilities in the valuation of rupee, we can see the cause can be attributed to a number of policies and events occurring onshore as well as around the globe. The first would be the strengthening...
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...22% in the last 1 year. In the article we will try to study the concerns of a country facing depreciating currency, the factors that led to this depreciation and the measures government can take to stabilize the situation. Most importantly we will see if global economic uncertainty rides over all the other domestic factors to determine strength of a currency especially in developing economies. Why don’t we need a depreciating INR? The persistent decline in rupee is a cause of concern. Depreciation leads to imports becoming costlier which is a worry for India as it meets most of its oil demand via imports. Apart from oil, prices of other imported commodities like metals, gold etc will also rise pushing overall inflation higher. Even if prices of global oil and commodities decline, the Indian consumers might not benefit as depreciation will negate the impact. The depreciating rupee will add further pressure on the overall domestic inflation and since India is structurally an import intensive country, as reflected in the high and persistent current account deficits month after month, the domestic costs will rise on account of rupee depreciation. Exchange rate risk also drives away foreign investors which in turn depreciates the local currency. Indian Rupee is currently caught in this vicious cycle; it will have to find a stable level to regain investors’ confidence. The depreciating rupee has serious effects on the external debt figures of the nation. The total external debt has...
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...The Indian Rupee Crisis Economics Essay-1 In this paper we are going to examine the cause and the impact of rupee depreciation on the Indian economy. Since last few months Indian rupee came under great stress as overseas investors are paring their exposure to Asia’s third-largest economy amid international uncertainty and mounting worries over the domestic economy. In 2009 – 2010 the exchange rate was hovering around the 43 – 45 rupees per US Dollar level. And now it is around 55 – 56 levels, the main reasons to examine are increase in import bill, higher inflation, fiscal mismanagement and all resulting in higher cost of borrowing. The rupee has lost more than 15% of its value this year, making it one of the worst performing currencies in Asia. This paper reviews the probable reasons for this depreciation of the rupee and the outlook for the same. It also reflects on the policy options to help prevent the depreciation of the Rupee. This paper will firstly discuss about the economy of currency to give an overview of the problem and the factors related to it. Afterwards it will be examining the causes of the Indian rupee depreciation with respect to the Indian economy and the global economy. And after that it will analyse the impact of the same on trade and business. Finally, recommending the policy actions in response of the falling currency. II. LITERATURE REVIEW: These papers include the work which have been used as a basis or reference for formulating the policies regarding...
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...state of affairs about the exchange rate fluctuations in India has been caused to a large extent by the worsening current account balance and the unfavorable expectations related with it. On the other hand, the question of interference by the government in the exchange rate market should be decided on the foundation of the impact of such exchange rate fluctuations on the real effective exchange rate and the likely effects on the employment situation in the country. There are an array of factors affecting the exchange rate fluctuations like interest rate, balance of trade, money supply, economic growth, foreign debt, inflation etc. India has seen a huge breakdown of the Rupee because of the adverse affects of these factors on the Indian currency. Mentioned below are the various sectors being affected by the Rupee depreciation. Fuel Price: India imports most of its oil consumption. As a result of dwindling of domestic currency, the Oil Marketing Companies(OMCs) will have to pay more to the countries from where they import oil and this encumber is passed on to the Indian consumer. India saw a huge ascend in petrol and diesel prices in the year 2012-13. Given that fuel prices have increased, the overall cost of transportation in the economy has escalated because of which the cost of all the...
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...Project Report on Depreciation of Indian Rupee Seminar on Contemporary Issues of Management Submitted To: Submitted by: Ms. Tanya Nagpal Reema Bharti Reg no.10901821 Abstract In this project report on Depreciation of Indian Rupee I have highlighted the different aspects of this problem. The Indian economy is at crossroad today. The Indian rupee had depreciated 20% since January and one of the worst performing currencies in the emerging markets. In this report first of all the different factors upon which a currency’s value is depended are explained such as demand and supply, market sentiments, speculations, debt and fiscal policy, interest rates etc. There are various reasons because of which Indian Rupee depreciated. Major reasons such as volatility in market rates, increase in crude oil prices and its consumption, increased imports, poor management of CAD are playing actively in depreciating Indian rupee. As there are two sides of every coin. There are winners and losers in this case also. Broadly talking that whoever is paying dollar is loser and receiver of dollar is winner. Falling rupee value affected different sectors of economy in different way but if want to take a wide view, it is having negative impact on economy’s every sector. But we should not lose hope. In today’s volatile world...
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...economy is continuing to grow and based on the purchasing power parity, it is the third largest in the world at 4.76 trillion dollars. India is also the second largest in the world when it comes to workforce. India’s three major economic sectors are: agriculture, industry, and services. The original official currency of India is the Indian rupee. The Indian rupee has been falling against the US dollar, as shown in the graph below. The exchange rate between the Indian rupee and the US dollar over the past five years are: 43.319 in 2008, 48.405 in 2009, 45.726 in 2010, 46.671 in 2011, and 53.437 in 2012. (CIA) This means that one US dollar is equivalent to 53.437 rupees, in the year of 2012. This also means that the value of rupee is depreciating. A weaker rupee has its pros and cons. A weaker currency will make imports more expensive, the price of oil and other materials to import from foreign countries will go up. Since one of the big imports of India is crude oil, it only makes the economy worse. Higher oil price means higher transportation price, so therefore producing products will be more expensive and that leads to higher inflation. Rupee depreciation has its bright side for companies that exports goods. Exporters are the biggest beneficiaries of depreciation of rupees because every dollar they earn will turn into more rupees. One of the major issues in India is the outpouring population growth. It is the second most populated country in the world, just after China. The...
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...„Organisational Context of Essar“ “We in the business community have a responsibility to contribute to a better understanding of the urgency of averting a crippling and self-inflicted recession,” writes Lloyd Blankfein, chairman and CEO of Goldman Sachs, in The Wall Street Journal this week. 1 Organisations interact with the world around them. They get influenced by and they influence their surroundings. Over the years those interdependences became stronger; Starbuck states, ‘not only have corporations created social bonds that span national boundaries, but hundreds of corporations are big enough to have memberships in the United Nations.’ He further encourages organisation theory to contribute to human welfare by acknowledging that organisations lie at the heart of major conflicts that are shaping the course of the 21 century and thus providing assistance to organisation in realising the importance of their relations to others and the importance of functioning effectively as part of society. 3 st 2 Starbuck (2003) identifies three grand areas of social conflict in which organisations are participating: - The conflict between corporations and nations, - the conflict between top managers and other stakeholders, and - the conflict between the short run and the long run. Mitigating them should be one of the main purposes of organisation theorists. Therefore it is imminent to identify the different dimensions of organisations and to describe the current and future external...
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...The Rupee shortage has emerged as a major issue due to the recent increase in demand for Indian Rupees to meet transactions related to trade in goods, services and capital and financial transactions. This is not surprising since Bhutan imports most of what it consumes from India, including construction workers. There is also a huge outflow of Rupees annually on education, health, pilgrimage and other travel related expenses as well as remittances out of the country. To meet the increasing demand for Rupee, the Royal Monetary Authority (RMA) had to resort to purchase of Rupee through the sale of 200 million US dollars from international reserves in December 2011 and as the INR became acute again, by July 2012 Bhutan’s borrowing stood at INR 11.6 which includes INR3.6M from State Bank of India, INR 6M from Government of India and 2M from Druk Punjab Bank. The present Rupee shortage in the country can be attributed to two main factors (i) rise in aggregate demand; and (ii) limited supply. The increase in aggregate demand has led to surge (increase) in imports as the domestic production capacity is unable to support the demand. On the supply front, the earnings from electricity exports to India remain Bhutan’s single largest export item, followed by exports of processed minerals like ferrosilicon, calcium carbide, cement, etc. Demand factors Major imports Major imports include fuel, vehicles, heavy earthmoving equipment, industrial raw materials, food items and other...
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...Economics 1,( BUS 121) Graded project number (05047700) The economic development in India followed socialist -inspired policies for most of its independent history, including state-ownership of many sectors; India’s per capita income increased at only around 1% annualized rate in the three decades after its independence. Since the mid-1980s, India has slowly opened up its markets through economic liberalization after more fundamental reforms since 1991 and their renewal in the 2000s, India has progressed towards a free market economy In the late 2000s, India's growth reached 7.5%, which will double the average income in a decade. Analysts say that if India pushed more fundamental market reforms, it could sustain the rate and even reach the government's 2011 target of 10%.States have large responsibilities over their economies. The annualized 1999–2008 growth rate for Tamilnadu (9.9), Gujarat (9.6%), Haryana (9.1%), or Delhi (8.9%) were significantly higher than for Bihar (5.1%), Uttar Pradesh (4.4%), or Madhya Pradesh (6.5%). India is the tenth-largest economy in the world and the third largest by purchasing power parity adjusted exchange rates (PPP). On per capita basis, it ranks 140th in the world or 129th by PPP. The economic growth has been driven by the expansion of services that have been growing consistently faster than other sectors. It is argued that the pattern of Indian development has been a specific one and that the country may be able to skip the intermediate...
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...International Trade & Finance life and economy of india The flag of India has three equal horizontal bands of saffron, white, and green with a blue chakra centered in the white band. The orange in the flag represents courage and sacrifice. The white represents truth, purity, and peace. The green represents faith, fertility, and chivalry. The blue chakra emblem is the Ashoka Chakra which is the Wheel of the Law. India shares borders with Bangladesh, Bhutan, Myanmar (Burma), China, Nepal, and Pakistan. It also is bordered by the sea on the west, south, and east. India is currently home to about 1.13 billion people, representing a full 17% of the earth’s population. India, being a vast country does not fit into any one zone and occupies a large area of South Asia. It can be divided mainly into four climatic zones namely Alpine, Subtropical, Tropical, and Arid. Though divided into different climatic zones, India seems to be unified by primarily four seasons- winter, summer, advancing monsoon, and retreating monsoon. This cycle of seasons has been disturbed due to uncontrolled industrialization and other developmental activities resulting in drastic changes in climate. This has lead to climatic disasters such as drought, landslides, floods, and global warming. The unchecked cutting down of trees indirectly leads to landslide and drought. Annual floods have become part of life in many regions of India. The diverse climate...
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...ACQUISITION AND TRANSFER OF IMMOVABLE PROPERTY IN INDIA Acquisition and Transfer of Immovable Property in India A person resident outside India who is a citizen of India (NRI) can acquire by way of purchase, any immovable property in India other than agricultural land/plantation property/farm house. He can transfer any immovable property other than agricultural or plantation property or farm house to: a) A person resident outside India who is a citizen of India or b) A person of Indian origin resident outside India or c) A person resident in India. He may transfer agricultural land/ plantation property / farm house acquired by way of inheritance, only to Indian citizens permanently residing in India. Payment for acquisition of property can be made out of: i. Funds received in India through normal banking channels by way of inward remittance from any place of India or ii. Funds held in any non-resident account maintained in accordance with the provisions of the Foreign Exchange Management Act, 1999 and the regulations made by Reserve Bank Of India from time to time. Such payment can not be made either by traveller’s cheque or by foreign currency notes or by other mode than those specially mentioned above. A person resident outside India who is a person of Indian Origin (PIO) can acquire any immovable property in India other than agricultural land / farm house / plantation property:i. By way of purchase out of funds received by way of inward remittance ...
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...Opportunities and Challenges in Waste Water Treatment Market in India India's economy is the eleventh largest in the world by nominal GDP and the fourth largest by purchasing power parity (PPP). Following strong economic reforms from the socialist inspired economy of a post-independence Indian nation, the country began to develop a fastpaced economic growth, as free market principles were initiated in 1990 for international competition and foreign investment. The environment market in India is one that is developing rapidly. Environment-consciousness is gaining ascendancy thereby enhancing demand for hazardous waste management facilities. The ministry of environment and forests has identified 18 highly polluting industry sectors but the most sophisticated technology will have to be imported. There are good prospects for joint-ventures between Indian and foreign companies in this field. In a country famed for its superstitious beliefs and practices, there was no opposition - rather, there was a public welcome - to a clean-up of the Ganges which is considered a Holy River among the majority Hindus. The fact that society acknowledged that their Holy River could be polluted points to a growing understanding of environmental issues in India. And this is good news for foreign and domestic environment-related businesses. In addition to this, there are several products that India needs to import, some of which are storage containers made of, or lined with, waste-handling category materials...
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...LOVELY PROFESSIONAL UNIVERSITY Form/LPUO/AP-3 (The format to be used for Planning the academic activities other than Lecturers/Tutorial/Practical like Assignments, Case study, Presentation, Quiz, Projects, Class tests, industrial visits, teaching practice, court visits etc. to be undertaken as a part of the continuous assessment for the Course) (TERM PAPER) School: LSB Department: Management Name of the faculty Member: Rajbir Singh Sethi Course No.: MGT 511 Course Title: Business Environment Class : BBA Section 1813 Batch 2010 Max. Marks :25 Date of Allotment :31/1/2011 Date of Submission:18/4/2011 . |Roll No. |Objectives of Academic Activity |Topic |Model* | |R1813 A01 |To enable students develop the |Disinvestment of PSU's |Analytical | | |Analytical skills by going through | | | | |the various practices going on in | |5 Marks-Viva | | |the field of Business & its | | ...
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...Business in Asia Country Based Business Opportunities Project Housing Opportunities in India Entering the Indian Housing Market ASIAM 2005 Due: 16th September 2005 Submitted: 10th September 2005 Submitted by: Please return graded assignment to: Brendan O’Farrell – 15 Tandanya Street Deakin Uni - S/N 201027576 Mansfield QLD 4122 TABLE OF CONTENTS 1. Executive Summary 3 2. Introduction 4 3. Country Profile 5 3.1 Population & Demographics 5 3.2 Raw Materials and Infrastructure 6 4. Socio-culture 7 4.1 Religion and Language 7 4.2 Indian Housing 7 4.3 Regional Development 8 4.4 Business Environment 9 5. Political, Security and Legal 10 6. Current and Future Environmental Factors now and as at 2008 11 6.1 Economical 11 7. Industry and Competitor Analysis 13 8. Strategy and Planning 14 8.1 Product Description 14 8.2 Product Manufacturing 14 8.3 Product Distribution Channel 15 8.4 Resource Delivery and Labourer Relations 16 8.5 Product Advantage 16 9. Mode of Entry 17 9.1 Options for Mode of Entry 17 9.2 Recommended Mode of Entry 18 9.3 Organisational Structure and Compensation 20 10. Monitoring and Control 21 10.1 Product Monitoring 21 10.2 Performance Measurement 21 11. Future and Exit Strategy 22 12. Conclusion 23 13. References 24 14. Appendices 27 1. Executive Summary This report was commissioned to examine and analyse environmental information on India to produce...
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...The Indian Rupee has depreciated to an all time low with respect to the US Dollar. On 28th August 2013, the Indian rupee had gone down to 68.825 against the Dollar but the situation was somewhat revived by the Reserve Bank of India that decided to open a special window for helping state owned oil companies – Indian Oil Corp Ltd., Bharat Petroleum Corp and Hindustan Petroleum Corp. The beneficiaries will be able to buy dollars through this window till further notice is provided. These companies, together, require about 8.5 billion dollars every month to import oil and it is expected that this will help them meet the requirements. This has had an immediate effect as is evident from the fact that the INR has started at 67 against the USD at the early proceedings in the Interbank Foreign Exchange Market. The question, however, is why this is happening. There are several reasons that can be enumerated in such a scenario: Basic law of economics As per the rudimentary laws of economics if the demand for USD in India exceeds its supply then its worth will go up and that of the INR will come down in that respect. It may be that importers are the major entities who are in need of the dollar for making their payments. Another possibility here could be that the Foreign Institutional Investors are withdrawing their investments in the country and taking them elsewhere. This can create a shortfall in supply of the dollar in India. In fact, of late, the FIIs have been heading to greener pastures...
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