Rupee Exchange Depreciation: Impact Analysis
Rupee exchange DepReciation: impact analysis
January 2012
The Associated Chambers of Commerce and Industry of India
ASSOCHAM Corporate Office: 1, Community Centre, Zamrudpur, Kailash Colony, New Delhi-110048 Tel: 011 46550555 (Hunting Line) | Fax: 011 46536481/82, 46536498
Email: assocham@nic.in | Website: www.assocham.org
Executive Summary
• The study assesses the impact of rupee depreciation on: The import bill of the country Key import commodities • Rupee depreciation has pushed rupee cost of imports. Rupee cost of imports have increased by Rs. 65999 crore. • Oil Imports in rupee terms have gone up by Rs. 5676.7 crore, even though Global prices oil has come down and as a result the dollar cost of imports have come down. • The impact of rupee depreciation on Crude Oil imports suggests: Dollar price of Crude Oil have declined while exchange rate was depreciating. Due to depreciation of currency, domestic price of crude oil has become more costlier. Expenditure on power and fuel for industry has increased. The importers have to pay an additional Rs. 489.8 per barrel to import the same quantity of Crude Oil. • The impact of rupee depreciation on Thermal Coal imports suggests: The benefit of falling commodity prices is not being transferred to the industry due to rupee depreciation. Rupee depreciation coupled with an inflexible tariff structure means that the power companies will have to suffer huge losses. The importer has to pay an additional Rs. 684.6 per tonne to import the same quantity of coal. • The impact of rupee depreciation on Fertilizer imports suggests: There has been an increase in the global prices of DAP fertilizer.
Rupee Exchange Depreciation: Impact Analysis
1
The depreciation of rupee has further aggravated the cost pressures on the industry. Continuous increase in the prices of imported fertilizer can also adversely impact the subsidy burden of the government.
January 2012
The Associated Chambers of Commerce and Industry of India
ASSOCHAM Corporate Office: 1, Community Centre, Zamrudpur, Kailash Colony, New Delhi-110048 Tel: 011 46550555 (Hunting Line) | Fax: 011 46536481/82, 46536498
Email: assocham@nic.in | Website: www.assocham.org
Executive Summary
• The study assesses the impact of rupee depreciation on: The import bill of the country Key import commodities • Rupee depreciation has pushed rupee cost of imports. Rupee cost of imports have increased by Rs. 65999 crore. • Oil Imports in rupee terms have gone up by Rs. 5676.7 crore, even though Global prices oil has come down and as a result the dollar cost of imports have come down. • The impact of rupee depreciation on Crude Oil imports suggests: Dollar price of Crude Oil have declined while exchange rate was depreciating. Due to depreciation of currency, domestic price of crude oil has become more costlier. Expenditure on power and fuel for industry has increased. The importers have to pay an additional Rs. 489.8 per barrel to import the same quantity of Crude Oil. • The impact of rupee depreciation on Thermal Coal imports suggests: The benefit of falling commodity prices is not being transferred to the industry due to rupee depreciation. Rupee depreciation coupled with an inflexible tariff structure means that the power companies will have to suffer huge losses. The importer has to pay an additional Rs. 684.6 per tonne to import the same quantity of coal. • The impact of rupee depreciation on Fertilizer imports suggests: There has been an increase in the global prices of DAP fertilizer.
Rupee Exchange Depreciation: Impact Analysis
1
The depreciation of rupee has further aggravated the cost pressures on the industry. Continuous increase in the prices of imported fertilizer can also adversely impact the subsidy burden of the government.