NEW DELHI, APRIL 18 : With Indian exporters suffering at the hands of the appreciating rupee, a survey by the United Nation’s Economic and Social Commission for Asia and Pacific (ESCAP) has listed exchange rate management as the biggest challenge that will have to be countered by the region’s growing economies. The survey, which was released by commerce and industry minister Kamal Nath today, pointed out that the major currencies are likely to appreciate on the back of large capital inflows due to speculation and a slowdown in the US economy.
Nath, however, played down the impact of the sluggish US economy, maintaining that the interdependence of the Indian economy and the US is minimal. “India’s growth is domestic market-driven and though there are vital linkages of export with overall growth, our economy is not China or US-centric. Hence, the impact of their economies on ours will be relatively less,” Nath said.
A day before the announcement of the annual supplement on foreign trade policy, the commerce and industry minister conceded that the appreciation of the rupee with respect to the dollar is a cause for concern and the Government will take steps to address the issue. “The strengthening of our currency by 9 per cent over the last year has hurt our exporters and the matter has been brought to my notice. We will speak to exporters and discuss what can be done,” he said, adding that the cheaper dollar has posed a serious threat to higher imports as well.
There is already the threat of a widening trade deficit, which may in turn put pressure on the current account deficit. Imports into the country have already grown by 35 per cent while exports have increased by only 22 per cent. The survey projects an overall positive outlook for developing economies in the region, with India tipped to grow at 9 per cent, a shade lower than last year’s 9.2 per cent.
