Ziraat Times Financial Analysis Team

Indian Rupee is almost in a free fall. On Wednesday, September 12, the rupee has touched its all time low of 72.91 against the US dollar. This fall is likely to result in higher costs of living across India. Jammu & Kashmir is particularly vulnerable to higher inflation in not only general day-to-day consumer items, but also in import-dependent commodities and consumer items.

Ziraat Times engaged with business leaders from across Jammu & Kashmir to have their views on how the rupee devaluation would impact the business sentiment and the common people’s purchasing power.


Mubeen Shah (Business Leader and former President KCCI)

“Whenever any country’s currency value goes down, it reflects either the economy isn’t doing well or there isn’t much trust on the stability of currency.

Talking about Kashmir, due to sudden implementation of GST, the supply chain has got disturbed.

Exports will increase due to competition, considering the example of carpets. The currencies of competitor countries, as China, Pakistan and Iran are also getting devalued. Thereby it won’t matter to such products in our market.”


Rakesh Gupta, President, Jammu Chamber of Commerce and Industries (JCCI)

“Currency’s weakness makes imports costlier. It will definitely have an impact on Jammu and Kashmir’s economy, as our state is an importer state. Prices of oil will rise further, the escalation in its cost will have wider implications. Oil importers will take a hit on margins or pass on the cost to consumers.

Importers of capital goods will see shrinkage in margins as well. On the other hand, sectors such as information technology, textiles and our handicraft sector that export goods will benefit in a big way. However, depreciation of the rupee has the potential to increase domestic inflation through the import route. As fuel permeates almost all sectors of the economy, retail inflation is likely to rise on a broad basis.”


Shakeel Qalander (Business Leader and former President FCIK)

“This is the impact of slowdown in business at least for last couple of years, after demonetization and then unplanned GST. Exports have taken a hit and this will be one reason for fall in rupee.

There was also a slowdown in international market over a period of time. From last year, precisely from current year, it is in the recovery part and it is gaining momentum. Both these things have contributed to fall in rupee. On one side, Internal trade has affected very much because of wrong policies. International market has gained, prices have gone up, and there has been tremendous increase in imports compared to exports,… thereby contributing towards fall in rupee.

We are in a pre-recession mode, since the slowdown has already been there. Job-cuts have been there after demonetization. Almost 1.5 million jobs have been cut, considering it as a proof that business is very much down.”


Muhammad Yasin Khan (Chairman, Kashmir Economic Alliance-KEA)

“Indian economy is running because of oil companies and a country cannot run because of oil companies only, unless there is an increase in exports. Our economy is shattered. We are a poor country wherein 50% of our population is Below Poverty Line.  Indian economy is not doing great due to two main reasons: Demonetisation and GST.”


Mushtaq Chaya (President PHD Chamber of Commerce)

“The situation is that we are under a recession due to fall of the rupee. No business house is doing well from last year. It is not a good position and we are victims since the whole country is under depression.

Due to this inflation, we are not in a position to match any country.”


Mohammad Ashraf (President- FCIK)

“Any changes in dollar affects our economy and imports. If we check the index of imports, it is going down. There is a drastic change and loss in receivables that has been pending before that change.

Talking about handicrafts, since it is mostly on credit basis, we might see some loss there and overall the profit share is decreasing.”


Javed Ahmed Tenga (President KCCI)

“Fall in rupee will definitely affect imports, however, exports will have somewhere edge over it. Since there is almost 10% fluctuation which in itself means that it will affect our imports. Everything will be expensive. Petrol prices will go up.”


Maajid Aslam Wafai (Businessman and President, J&K Cold Storages Association)

“This in no way is going to make create a positive sentiment in the market. There were times when the fall in rupee would boost the exporters’ confidence but that is also falling flat with the depreciation of other world currency. All FMCG are going to get dearer and this depreciation  surely has inflationary tendency which is going to hit  poor man and we shall also see prices of petrol and diesel going further upwards. Sooner or later RBI may have to intervene.

And the imports are going to get costlier. As far as the imports of fresh fruits are concerned the fall in rupee may give some sort of support to the local producers.”




Bashir Ahmad Basheer (President, New Kashmir Fruit Association, New Fruit Complex, Srinagar)

“The continuous fall in rupee exchange value has resulted in inflation. The burden of extra transportation cost will fall finally on the shoulders of growers hence resulting in another hole in their pocket.                         


Fayaz Ahmad Malik (President , Fruit Growers & Dealers Association,  Fruit Mandi, Sopore)

“The falling value of rupee will have positive impact on the fruit industry because the price of imported fruits will increase, thus providing a good chance for our fruits in the domestic market.”


Mushtaq Ahmad Malik (President, Fruit Growers & Zamindar Association, Shopian)

“Due to falling value of money, the profits of growers will automatically come down because the cost of raw materials and transportations will be higher than it used to be.”


Mushtaq Ahmad Tantray (Member, Fruit Growers & Dealers Association,  Fruit Mandi, Sopore)

“As the value of money goes down it will directly impact the fruit market. The supply and demand will not be in equilibrium. Hence will lead to reduction in sales.”


Ishfaq Ahmad Yatoo (Member, Fruit Growers & Dealers Association,  Fruit Mandi, Sopore)

“The falling value of money will be beneficial for the growers who export the fruits to the countries who trade in dollars. Only 15% of our Apple is exported and the remaining 85% is consumed in the domestic market. So I think it will not have any severe impact on fruit industry.”


Firdouse Ahmad (Member, Fruit Growers & Dealers Association, Fruit Mandi, Sopore)

“The custom duty on export of fruits to Bangladesh & Nepal is already high and by the weakening of rupee the taxes on exports will increase and that may result in hindering them to buy our fruits.”


Bashir Ahmad Waza (Fruit Grower)     

“Its impact is severe when we talk about the Jammu and Kashmir economy. The falling rupee results in increase in oil prices, inflation, higher interest rates and expensive day-to-day items.”



Experts told Ziraat Times that the Reserve Bank of India (RBI) now appears to be open to further rupee weakening.

“India’s current account deficit (CAD) is expected at over $70 billion in FY19, and we are having to borrow foreign currency to fund our rising oil, electronics and other imports”, said Amit Kulkarni, currency analyst at the Dalal Street, Mumbai told Ziraat Times.   

Impacts on Jammu & Kashmir

For the common man in Jammu & Kashmir, the falling rupee is going to hit where it hurts the most – their pockets.

Cost of fertilisers and other import-oriented commodities will go up

The weakening rupee is going to make crude oil, fertilisers, medicines and iron ore, which India imports in large quantities, costlier. Though these items are not for J&K’s daily consumption, they are likely to impact people’s finances indirectly.

India depends heavily on imports of its crude oil needs. A weak rupee will further up petrol and diesel prices, in case the union and J&K governments don’t decide to lower the taxes.

The problem is that fuel is directly connected with the cost of transportation. Prices of goods that are transported from one part of the country to another, such as food, are bound to rise.

FMCG, or fast moving consumer goods , such as soaps, detergents, deodorants and shampoos, of which crude oil is an input, are likely to become more expensive.

Impact on the agri basket

India depends massively on imports of pulses and edible oil, with about 70% the edible oil consumed annual being imported. People in Jammu & Kashmir love pulses and edible oil. Refined soya oil, among other edible oils, will get costlier too.

Electronic consumer goods could get costlier too

Electronic consumer goods such as computers, televisions, special kitchen equipment, mobile phones, etc, with imported components will also become costlier.

NRKs are calculating and smiling to themselves

Non-resident Kashmiris who earn their salaries in dollars or other currencies pegged with US dollars are a happy lot today. Depreciating rupee means more earnings to them and fatter remittances back home. They might even go for a property buying spree as well.

Cost of foreign education will go up too

There is a considerable number of students from J&K studying abroad these days. Rupee depreciation means parents will have to bear out extra money for their children’s education. Not only the fees, the living costs will go up too.

Students who have taken loans to fund their foreign degree are also bearing the brunt. Education loans are usually in rupees, but as students pay their expenses in a foreign currency, the cost of education and living expenses are likely to go up.

Monthly pay cheques could get leaner

For some people working in private companies outside J&K, pay cheque may shrink as well. Every industry which is dependent on imports will have to face an increase in cost of production and operations. Quite often, companies cut on salaries. The current rupee fall might even force some companies out of business, meaning some jobs could be lost as well.

For IT companies it is a bonanza

IT engineers, software developers and other technical people from J&K working with IT companies might have a moment of cheer. It is a good time for IT companies which earn in dollars. Rupee fall means more rupe earnings per dollar to them.

Tourism in J&K might just get more attractive

When the rupee falls Indians planning their vacations abroad re-think their plans. Indian holiday makers usually travel on planned budgets. Any big spike in the expected bill makes travel plans go awry. So, it is possible, those holiday makers who wished to travel to Europe’s alpine destinations might well turn to Kashmir and Ladakh.

Cars might become costlier

The dream of owning a new car might get a little more difficult. The depreciation of rupee could impact the automobile sector in three ways –  cost of imported components would go up, some companies will have to pay higher royalty to foreign parent firms and, third, many have foreign currency loans in the form of external commercial borrowings and foreign currency convertible bonds.

Therefore, more or less all auto companies will have to increase prices

Considering that Jammu & Kashmir has a severe logistical disadvantage, with higher transportation costs of goods exported here, the state is likely to experience a relatively deeper inflationary stress.

(Aijaz Ahmed Khan, Farooq Sopori and  Ambreen Shah contributed to this report)

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1 Comment

GH.Nabi Malik September 24, 2018 at 5:10 pm

Nice ,dispite of a complex issue, different opinions get to study and understand the issue.

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