The upwardly mobile middle class, and the affluent sections of society whose children are studying abroad, are feeling the pinch of a tumbling rupee. The United Progressive Alliance (UPA) government is also concerned, but seems unable to do much about it, with the rupee reaching an all-time low of 56 per U.S. dollar earlier this week.
Prime Minister Manmohan Singh on Friday took stock of the economic situation with his top economic officials, including Reserve Bank of India (RBI) Gov. D. Subbarao, Planning Commission Deputy Chairman Montek Singh Ahluwalia and the Finance Ministry’s chief economic advisor, Kaushik Basu.
The prevailing view at the meeting was that there was precious little that India could do to arrest the freefall of the rupee, which has dropped for 11 weeks straight for the first time since October 2008. However, the government is hoping that if international oil prices continue to fall, and gold imports slow further, the currency will start to strengthen.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
The government has indicated that limited intervention by the RBI will continue. However, the government expects the rupee to remain volatile at least until Greece holds its latest election. In the meantime, a growing number of Indians are complaining about the high cost of traveling overseas, or sending their children to study abroad.