GTRI: Weakness in rupee to increase the country’s import bill

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New Delhi|After the economic growth rate being slower than expected, the crisis on the Indian economy is deepening due to the continuous fall of the rupee. India’s gold import bill will increase due to fall in the exchange rate of rupee against the US dollar. Especially when gold prices in the global market have increased by 31.25 per cent year-on-year to reach $86,464 per kg in January, 2025. Apart from this, higher payments for crude oil, vegetable oil, electronics, coal, diamonds, machinery, plastics and chemicals will also increase the import bill.

Economic research institute Global Trade Research Initiative (GTRI) said, commodity prices are increasing in the global market. Along with the import bill, prices of energy and raw materials will also increase in the country due to weakness in the rupee. This will increase pressure on the economy and inflation front. That too at a time when consumption in the country is continuously decreasing, the effect of which was seen in the form of decline in the growth rate figures for the third quarter of the current financial year.

Indian currency fell 4.71 percent in one year
According to the report, the rupee has fallen 4.71 per cent against the US dollar since January 16, 2024, to levels of 82.8 to 86.7. In the last 10 years, that is, between January, 2015 and 2025, the Indian currency declined by 41.3 percent and has fallen from 61.4 to 86.7 rupees per dollar.

The Chinese yuan declined by 3.24 percent in 10 years and has declined from 7.10 to 7.33 yuan.
Limited role of RBI in stopping the decline
Srivastava said, the real situation is serious. Most of India’s foreign exchange reserves of over $600 billion are debt/investment. It is to be paid with interest, thereby limiting the role of RBI in stabilizing the rupee.

GTRI suggested that India must carefully balance GDP growth and inflation control to achieve long-term economic stability. Along with this, rupee management and trading strategies will have to be reconsidered.

GTRI founder Ajay Srivastava said, as per the general opinion, a weak currency should boost exports. But, the figures of the last 10 years of India are telling the opposite story. These figures show that the weak rupee does not help exports. However, high-import sectors are booming, while labor-intensive and low-import industries such as textiles are faltering.
Total commodity exports have grown by 39 per cent over the period 2014 to 2024, Srivastava said, while high-import sectors such as electronics, machinery and computers have seen much higher growth. These trends show that a weak rupee does not always boost exports. It hurts labour-intensive exports the most and promotes import driven exports with little value addition.