Effects - if Rupee is equal to Dollar
India is the major exporter of goods and services throughout the world. The reason for exports to,
say for example to USA is because of currency difference since exporting goods generate huge amount of Foreign Reserves. A review to draw a comparison if both Rupee and the Dollar are
kept at the same level shall reflect the following effects -
1. Decline in Exports - If one consignment of shoes to be exported costs Rs.10,000/- which is
equal to 10,000 Dollars, then why would anybody will like to send it? Because earnings will
remain same. Moreover, it will discourage exporters' community as well Such activity have
some dangers and harms also. Currency fluctuates mainly with different economic cycles,
purchasing power and market forces besides other factors. Not exporting will mean no dollars
in India which will effect international payments capacity, contingencies or unexpected capital
needs.
2. Loss of jobs - In service sector jobs will vanish in foreign sector which contributes to 60%
(app.) to the GDP and employment opportunities. When US companies have to pay same
amount of salary in dollars to Indian employee, they may instead outsource the jobs to the
workforce from some other country.
This will tend to increase unemployment of Indians and will also effect country's development
needs.People will start for a job at less pay package which will trigger into the problem of
paying EMIs of their home loans besides other household problems. Banks will have to face
huge outstanding loans burden.
Govt.'s focus is on to stabilize the effectiveness of currency fluctuations. It is a fact that strength
of the currency is linked with the productivity of nation. Results of reducing currency value
with dollars has created problems in other countries like Japan in 1986. It is, therefore,
important to understand that variation of Dollar with Indian rupee will keep exports & wages
high and keep imports low.
The conclusion is that nation should increase productivity (more specifically of the products
which are imported), keep imports at minimum level which will not only add to more value to
the currency but more jobs and good foreign exchange reserves.
say for example to USA is because of currency difference since exporting goods generate huge amount of Foreign Reserves. A review to draw a comparison if both Rupee and the Dollar are
kept at the same level shall reflect the following effects -
1. Decline in Exports - If one consignment of shoes to be exported costs Rs.10,000/- which is
equal to 10,000 Dollars, then why would anybody will like to send it? Because earnings will
remain same. Moreover, it will discourage exporters' community as well Such activity have
some dangers and harms also. Currency fluctuates mainly with different economic cycles,
purchasing power and market forces besides other factors. Not exporting will mean no dollars
in India which will effect international payments capacity, contingencies or unexpected capital
needs.
2. Loss of jobs - In service sector jobs will vanish in foreign sector which contributes to 60%
(app.) to the GDP and employment opportunities. When US companies have to pay same
amount of salary in dollars to Indian employee, they may instead outsource the jobs to the
workforce from some other country.
This will tend to increase unemployment of Indians and will also effect country's development
needs.People will start for a job at less pay package which will trigger into the problem of
paying EMIs of their home loans besides other household problems. Banks will have to face
huge outstanding loans burden.
Govt.'s focus is on to stabilize the effectiveness of currency fluctuations. It is a fact that strength
of the currency is linked with the productivity of nation. Results of reducing currency value
with dollars has created problems in other countries like Japan in 1986. It is, therefore,
important to understand that variation of Dollar with Indian rupee will keep exports & wages
high and keep imports low.
The conclusion is that nation should increase productivity (more specifically of the products
which are imported), keep imports at minimum level which will not only add to more value to
the currency but more jobs and good foreign exchange reserves.
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