The rupee fell to a new record low of 58.64 versus the UD Dollar . The reason behind the rupee’s recent weakness is the heavy selling of debt by foreign investors but the inflows into equities have so far been positive.
As analysed by economists, a sustained fall in the value of the rupee would make the going even harder as it would worsen the current account deficit and endanger the fall in inflation as imports become costlier.
However, the positive aspect of the depreciating rupee is for the Indian IT sector who generate more than 80-90 per cent of their revenue from the overseas markets and this kind of appreciation in foreign currency will enhance their actual realisation of revenue in dollar terms.
The depreciation in the rupee creates many problems for the economy leading to high inflation, as India imports around 70 per cent of its crude oil requirement and the government will have to pay more for it in rupee terms. Due to the control on oil prices, the government may not easily pass the increased prices to the consumers. Further, this higher import bill will lead to rise in fiscal deficit for the government and will push the inflation.
Moving to the recent spate of bad news related to the IPL, it has raised questions about its viability and credibility, perhaps even putting into doubt its immediate future. The Mumbai and Delhi Police are investigating for alleged involvement in illegal betting in this year’s edition of the Indian Premier League or IPL, the country’s top domestic competition. While most experts are convinced that the brand of the IPL will take a severe hit, not many feel it will affect the viewership.
In lieu of the recent instances of raising monies by companies in a convoluted manner, the MCA has taken some steps in order to protect the interest of investors and ensure that Companies raise monies in compliance’s to the provisions of the Companies Act/ Deposit Rules. The Ministry of Corporate Affairs has given powers to ROCs to obtain declaration/ affidavits from subscribers/first directors at the time of incorporation to the effect that the company/directors shall not accept deposits unless compliance with the applicable provisions of the Companies Act, 1956, RBI Act, 1934 and SEBI Act, 1992. Let’s hope that the regulator continues to provide the framework of rules for its domain consistent with the law and that single forum is available for an informed consideration of corporate issues
Well articulated thoughts.