Inflation may increase soon due to 'this reason'
Monday - November 25, 2019 2:48 pm ,
Category : WTN SPECIAL
Commodities to rise as the rupee’s weakening against the dollar
The Indian economy to suffer another 'major setback' due to the economic slowdown and trade war
NOV 25 (WTN) - Now the economy of any country is not only affected by the conditions of that country, but in this period of economic liberalization, the economies of the world are related to one other in such a way that the economy of almost every country is now global, and economic conditions are affected due to global reasons. As you know, the ongoing trade war between the US and China has directly affected other economies of the world. At the same time, due to the global economic slowdown, almost 90 percent of the economies of the whole world is being affected due to some reason.
Amidst all this, it is feared that the Indian rupee, one of the strongest currencies in Asia, maybe weakening this quarter, and if that happens, it could affect the Indian economy. In fact, in view of all the economic developments, a report has claimed that India's economic growth rate can go to the lowest level of 6 years.
According to those analyzing the Indian currency rupee fluctuations, the rupee has lost nearly 5 percent from its July high of this year. On the other hand, due to a rising level of public debt and debt crisis in non-banking finance companies, it is under selling pressure. The general public of the country may suffer a setback due to the weak rupee against the dollar.
In fact, if the rupee is weaker than the dollar, then it will make imports expensive, and it is natural that inflation will increase due to expensive imports, which will cause problems for the common man. Meanwhile, rating agency Moody's Investors Service has reduced India's credit rating outlook to negative this month. Moody's cut the outlook, stating that the impact of the global economic slowdown in India was much deeper and predictably longer.
According to economics experts, the biggest emerging risk to India's economy is a weakness in the GDP growth rate. As we told you that the economic slowdown has negatively impacted the GDP growth rate, hence the poor growth rate could lead to lower capital inflows, and it could prove negative for the Indian currency. On the other hand, the fiscal reforms given by the government to give relief to the corporate sector can increase the fiscal deficit, which can also cause the rupee to depreciate.
According to the experts, India's GDP growth rate in the current financial year has been affected by the global economic slowdown, and it may be reduced from 4 to 4.5 percent in this current financial year. There are several reasons for the decrease in the growth rate, such as a steep decline in automobile sales, a decrease in the core sector and growth, and the Construct and Infrastructure Investment declining. There is a decrease in the GDP growth of the country due to all these and other reasons. For your information, let us know that India's GDP growth rate had already come down to a 6-year low of 5 percent in the June quarter of the current financial year.
On the other hand, if the rupee is expensive in comparison to the dollar, then it will directly affect inflation. For your information, let us know that India imports around 80 percent of its petrol and diesel needs. But the weakening of the rupee against the dollar will make the import of petrol-diesel expensive and the cost of diesel being expensive, the transportation cost will become expensive and everyday necessities will become expensive. Not only fuel, but the weakening rupee will also make it expensive to import other goods from abroad, which will increase inflation and will directly burden the general public.
NOV 25 (WTN) - Now the economy of any country is not only affected by the conditions of that country, but in this period of economic liberalization, the economies of the world are related to one other in such a way that the economy of almost every country is now global, and economic conditions are affected due to global reasons. As you know, the ongoing trade war between the US and China has directly affected other economies of the world. At the same time, due to the global economic slowdown, almost 90 percent of the economies of the whole world is being affected due to some reason.
Amidst all this, it is feared that the Indian rupee, one of the strongest currencies in Asia, maybe weakening this quarter, and if that happens, it could affect the Indian economy. In fact, in view of all the economic developments, a report has claimed that India's economic growth rate can go to the lowest level of 6 years.
According to those analyzing the Indian currency rupee fluctuations, the rupee has lost nearly 5 percent from its July high of this year. On the other hand, due to a rising level of public debt and debt crisis in non-banking finance companies, it is under selling pressure. The general public of the country may suffer a setback due to the weak rupee against the dollar.
In fact, if the rupee is weaker than the dollar, then it will make imports expensive, and it is natural that inflation will increase due to expensive imports, which will cause problems for the common man. Meanwhile, rating agency Moody's Investors Service has reduced India's credit rating outlook to negative this month. Moody's cut the outlook, stating that the impact of the global economic slowdown in India was much deeper and predictably longer.
According to economics experts, the biggest emerging risk to India's economy is a weakness in the GDP growth rate. As we told you that the economic slowdown has negatively impacted the GDP growth rate, hence the poor growth rate could lead to lower capital inflows, and it could prove negative for the Indian currency. On the other hand, the fiscal reforms given by the government to give relief to the corporate sector can increase the fiscal deficit, which can also cause the rupee to depreciate.
According to the experts, India's GDP growth rate in the current financial year has been affected by the global economic slowdown, and it may be reduced from 4 to 4.5 percent in this current financial year. There are several reasons for the decrease in the growth rate, such as a steep decline in automobile sales, a decrease in the core sector and growth, and the Construct and Infrastructure Investment declining. There is a decrease in the GDP growth of the country due to all these and other reasons. For your information, let us know that India's GDP growth rate had already come down to a 6-year low of 5 percent in the June quarter of the current financial year.
On the other hand, if the rupee is expensive in comparison to the dollar, then it will directly affect inflation. For your information, let us know that India imports around 80 percent of its petrol and diesel needs. But the weakening of the rupee against the dollar will make the import of petrol-diesel expensive and the cost of diesel being expensive, the transportation cost will become expensive and everyday necessities will become expensive. Not only fuel, but the weakening rupee will also make it expensive to import other goods from abroad, which will increase inflation and will directly burden the general public.
