Rising Rupee, Interest Rates Distressing Corporate India - FICCI
According to a survey report, the rising rupee value versus the US dollar and a consequent upsurge in rates of interest has resulted to an unexpected fall in the confidence level of corporate India.
A survey report prepared by Federation of Indian Chambers of Commerce and Industry (FICCI) showed that the exports, industrial development and investment funds have been worst hit because of intense growth of the Indian currency, and if this is not controlled then economic development may decompress.
Sectors that have been worst hit owing to both elements include automobile, information technology, pharma, textiles, realty, constructions, food and beverages.
The review emphasized that about 30 per cent of the companies’ reviewed depicted feeble demand as a restricting factor. The study results also indicate that a few industrial sectors have been impelled to decrease output following weak demand.
“The continuation of the high interest rate phase along with the movement of the rupee in a narrow band close to Rs.40 to a dollar mark has made corporate India apprehensive about their own performance,” the survey said.
As a result of an unexpected delay of the key sectors of the economic system, aspects of employment have also experienced a delay.
FICCI added, “With regard to industry performance in the coming six months, we see that the sentiment prevailing among respondents from the services sector has taken a strong hit.”
Business groups also fear a rejection in sales and profit margins if steps to seize the rupee increase are not taken right away. The survey alleged more than 16 percent of the companies’ experience that their profits would be hit.
As the rising rupee has adversely shammed the services sector and the light industry sector, responders from both segments have projected a downslide in their export performance in the coming six months.