'Real’ depreciation of Indian rupee at 6 to 7 per cent, estimated by IMF
'Real’ depreciation of Indian rupee at 6 to 7 per cent, estimated by IMF
The real depreciation of the Indian rupee this year as compared to December 2017 is between six and seven per cent, according to the IMF. It warned that it would jack up the prices of imported goods such as oil and petroleum products, leading to an upward pressure on inflation.
Since the beginning of the year, the Indian rupee “has lost about 11 per cent of its value in nominal terms vis-a-vis the US dollar”, International Monetary Fund (IMF) spokesperson Gerry Rice said.
“As a result, so far this year the real effective depreciation of the Indian rupee compared to December 2017, by our estimates, is between six and seven per cent,” Rice said.
“On the other hand, the depreciation will obviously raise the prices of imported goods such as oil and petroleum products, potentially putting an upward pressure on inflation,” he said.
Referring to a recent report of the IMF on India, Rice said the Indian economy is recovering strongly from the two transitory disruptions in recent years--the Goods and Services Tax (GST) and demonetisation.
“Growth has been gradually accelerating in recent quarters, with strength in both consumption and investment, which have helped the economy,” he said.
“The demonetisation did hinder the money supply, creating cash shortages, which also somewhat dampened consumer and business sentiment,” he said, adding that it resulted in relative slowdown in growth.
“On the other hand, its positive effects, I think, included enhanced digitalisation and higher formalisation of economy, which would help raise, amongst other things, the revenue and tax compliance,” he said.
“The growth in the number of new taxpayers, as documented by the Ministry of Finance, has been substantial in recent years,” he said, adding that it is being monitored on an ongoing basis.
