Free Press Journal

India may have to cough up Rs 685 billion more to repay debt



Mumbai: The BJP government’s worries have begun to mount: On the one hand, it has slipped badly on the oil slick; on the other hand, the rupee is sliding into a deep abyss. But oil isn’t the only headache for India as the rupee slides, says wire agency Bloomberg. You can add external debt to the list.

With the currency having eroded more than 11 percent to the dollar this year, the government will have to fork out an extra 685 billion rupees ($9.5 billion) when repaying short-term debt in the coming months, according to conclusions arrived at by the State Bank of India. The math of it says that if the rupee averages 73 to a dollar this year and crude oil, India’s biggest import, averages $76 a barrel for the rest of 2018, it could see the oil bill bloat by 457 billion rupees. This is the assessment of none other than Soumya Kanti Ghosh, the chief economic adviser at the State Bank, adds Bloomberg, citing from his note.

Incidentally, the rupee had slipped past 72 per dollar to a record low on Thursday. But after seven consecutive sessions of depreciation, the rupee found some respite on Friday after the RBI sold the greenback aggressively. But even as the Rupee vaulted by 26 paise to end at 71.73, there are concerns over slowing capital flows and a wider trade deficit that could stretch the funding of India’s current account gap. The lower-than-expected goods and services tax collections have also increased the uncertainty; and all this in the midst of Trump’s geopolitical mess and fears of the contagion spreading.