Weak rupee causing inflation, no India aid to IMF, says minister

New Delhi: India’s inflating import bill is due to the uncertain global economic environment, Minister of State for Finance Namo Narain Meena said today in a written reply to the Lok Sabha.

“The rupee decline makes oil imports more expensive, contributing to inflationary pressures. The rupee cost of other imports would also rise, thereby contributing to price rise,” Meena said.[caption id=“attachment_140588” align=“alignleft” width=“380” caption=“Minister of State for Finance Namo Narain Meena. Image courtesy PIB”]  [/caption]

The rupee has weakened 18 percent against dollar so far in 2011 and had touched a historic low of 52.73 on 22 November. The rupee was trading at 55.22 against dollar in the afternoon trade.

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“The main reason for depreciation of rupee against US dollar is uncertain global economic environment, particularly unfolding of eurozone sovereign debt crisis,” Meena said.

He added that the fluctuation in rupee exchange rate is due to demand-supply mismatch.

“Though in the long run, the rupee fall would benefit exporters through higher export earnings and improved competitiveness vis-a-vis other emerging economies, the decline in the value of Rupee would have detrimental effect in the short run,” Meena added.

The minister said that the International Monetary Fund (IMF) has not requested India to provide funds to help combat the debt crisis in Europe.

“No such request has been received from the International Monetary Fund to help in saving Europe from a fresh debt crisis,” Meena told Parliament.

The IMF on Tuesday beefed up its lending instruments and launched a six-month liquidity line, throwing help to countries with solid policies that may be at risk from the euro zone debt crisis.

Agencies