The common man is now battling inflation and the falling rupee with no relief in sight. The Indian Rupee on Tuesday, July 19, sank to a record low of 80 per US Dollar in early trade for the second day in a row, reported news agency ANI. With the rupee crossing the psychologically important mark of 80, alarm bells have gone off. Students, travellers, patients, investors and the common man in every sphere will bear the brunt of the rupee falling.

STUDENTS GOING ABROAD NEED TO TIGHTEN THEIR BELTS

If you are a student going to study abroad, you will end up paying more now for the same fees as the rupee has weakened.

Twenty-four-year-old Shristri who is set to attend Georgetown University in Washington DC to pursue medicine is feeling a price pinch even before leaving for the United States. One-way airline fares have doubled from Rs 50,000 last year to over Rs 1 lakh.

Lamenting the rising cost, Shrishti told India Today, “I have taken an education loan and the bank has approved the sanctioned amount without any change in the interest rate, but the purchasing power of the money has reduced drastically. This means for everything from groceries to travel, I now have to shell out more from my pocket."

"My budget has increased by lakhs as the falling rupee is set to have a domino impact. Now I and others like me who are going to the US want to land campus jobs immediately so that we can repay our loans while earning in dollars."

Experts are suggesting that students should go prepared from India in ways that will help them save money once they start their lives abroad. Students' to-do lists before leaving must include visiting their dentist, getting a haircut, shopping for clothes, and shoes and getting all medical tests done.

This year, in January, Indians spent over $2 billion overseas for the first time. The milestone was crossed again in April. Nearly 56 percent of the amount was spent on travel and overseas education. The average monthly spending was $1.6 billion in FY22 compared to just a little over $1 billion in FY20.

DESI TRAVELLERS' WOES INCREASE

The falling rupee is the latest hurdle in desi globetrotters' post-pandemic travel plans. One usually pays for flights and hotel bookings in dollars and that is set to cost more.

The exchange rate shocker is going to make hotel stays, local travel, sightseeing, food and beverages abroad much more expensive. Data on Yatra.com shows that travel packages offered on the site to the US and Australia have witnessed an 8 to 10 percent increase in pricing in the past one month.

The pinch begins with airfare as data analysis shows return economy airfare (India-New York) used to cost Rs 75,000 to 80,000 in 2019. Now the same return economy is costing a whopping Rs 2 lakh.

India-London return economy airfare in 2019 stood at Rs 45,000-50,000, the same now costs Rs 1 lakh.

WHY HAS THE DOLLAR GAINED?

Higher interest rates in the US, the Russia-Ukraine war and India's trade deficit have all led to the dollar strengthening. The dollar also gained as Europe was forced to shop for oil in markets that demand the US currency.

Like many economies across the globe, the US is battling domestic inflation and to tame it, the US Federal Reserve System decided to fight it with higher interest rates, triggering a mass departure of investments to America, which has also been good for the dollar. The hike in interest rates in the US has made the dollar a more attractive investment for institutional investors all over the world. These Foreign Institutional Investors (FII) have withdrawn large amounts of money from Indian equity and other markets and invested them in the US, boosting the dollar against all other world currencies.

The war in Ukraine has also fed into an overall uncertainty driving investors towards the dollar.

INFLATION BURNING A HOLE IN THE COMMON MAN'S POCKET

Curd, milk, honey and wheat flour are set to witness a rise in prices because the government started levying GST on these daily-use items.

A 5 percent GST on pre-packaged items might not sound like too much, to begin with, but with a quick calculation, you will find out how it will impact your monthly budget.

Suppose one buys one packet of milk for Rs 30, now with 5% GST, the cost of the packet will be Rs. 31.5 per packet. Now if one buys one packet of milk every day, it used to cost him Rs 900, the same will now cost him Rs 945.

The government and opposition parties are at loggerheads on this issue.

Ranjeet Ranjan, Congress Leader told India Today, “In Rajya Sabha, opposition leaders took curd and milk packets into the well because India has been independent for 75 years, never has curd, milk, honey has been taxed like this. "

"The government is deaf and dumb, this is the same government which had promised Rs 15 lakh in the account of the common man, now the same common man is paying 5%," she added.

Gaurav Gogoi, Congress Deputy Leader in Lok Sabha blamed the ruling BJP for the ongoing tussle. He told India Today, “Look at the business advisory council meeting, there is no mention of the discussion we were seeking. From what a common man eats to his cremation, every item has become expensive today. The government is lying, the truth is that it doesn't want a discussion on inflation and GST."

"The common man is dying but the government is sitting on a high horse. Whenever opposition parties pick up these issues, the government starts making personal comments," he added.

While the opposition is training its guns on the BJP, the government says it is willing to have a discussion.
Piyush Goyal, Commerce Minister, told India Today, "The government is ready for every discussion. Even the Rajya Sabha Chairman has conveyed the message. We all know that Finance Minister Nirmala Sitharaman is suffering from Covid. But Congress won’t accept that either, as it exposes them before the entire nation.”

Calling the opposition's tactics baseless, he added,"Nirmala Sitharaman said yesterday that the decision was made by the GST Council. The Council had the finance ministers of Rajasthan, Chhattisgarh and Jharkhand. This was a decision taken by the consensus of all the state governments on board. So disrupting Parliament in this manner is baseless.”