All-time low for the rupee signals the advent of tougher times for the average person; durables, cars to cost more .The average Indian should brace up for even tougher times, as the staggering decline in the value of the Rupee is all set to take their regular and discretionary expenditures to new highs!
The average person in India has definitely been the entity that has lost the most in the economic turbulence. Right from consumer goods to luxury items, everything has seen a dramatic rise in pricing, which has rendered the people in a very difficult position. While the government and the relevant authorities focus on improving the bigger picture, inadequacy of their decision making in the past, especially in the government’s case, has led to the situation for the average person worsening with time. Now just as things seemed to be improving, another issue is set to hit the budget of the regular individual of India, and make life further challenging. The INR has hit an all-time low and is moving further downwards, and this carries tremendous implications that primarily concern inflation. The steep decline in the value of the Rupee, which is expected to hit the 60 mark against the US dollar, will trigger a sharp increase in the prices of the consumer durables, especially items such as Cars. While this would carry serious challenges for the consumer, it would impact the industries adversely as well, since the higher pricing would further suppress the already meager demand, especially in cases such as the automotive industry.
There is a direct relation between the margins of the consumer durable segment and the value of the currency, and this is what effectively drives the reduction and increase in the prices of the commodities. The declining Rupee value means that the imports are now costlier, which leaves the manufacturers with no other option but to increase prices. All major companies are expected to raise prices by 7-10 per cent in the near future, especially in the consumer electronic and the mobility segment. The already struggling automotive industry is expected to feel the heat, more than any other industry, because a direct implication of the increased prices would be further decline in sales, which would spell disaster. The worsening of the situation in sensitive industries such as the car industry, could also lead to job cuts at a large scale, making it even tougher for the consumer.
The worst part of the situation is that the indicators for the future aren’t healthy either, as the Rupee will take its time to come back to normal levels. The next few months are thus going to be one most challenging periods for the consumer and the durable goods segment. The condition coupled with some of the nature driven issues in Thailand, makes the IT product sector the worst hit of the lot. The average Indian has been at the receiving end throughout this turbulent phase, and with the authorities failing to take complete control of the situation, it would continue to be challenging times for him, at least in the near future.