The Minister stated that global factors such as the Russia-Ukraine conflict, soaring crude oil prices and tightening of global financial conditions are the major reasons for the weakening of the Indian Rupee against the US Dollar.
In his reply, the minister further stated that exchange rate is only one of the several different factors such as, demand for domestic and foreign goods, commodity prices, crude oil prices etc., which affect India’s export and import demand.
India’s merchandise exports touched a record high of US$ 421.9 billion during 2021-22. India’s exports during each month of the current year have been higher than those of the corresponding months of the previous year.
The overall impact of exchange rate depreciation on domestic prices depends on the extent of pass-through of international commodity prices to the domestic market, the Minister stated.
While the rupee depreciation against dollar is putting pressure on the trade deficit making rising imports more expensive, the continued high inflationary pressure back home has become a cause of worry for policy makers as both commodities and food prices have shot up impacting consumption and demand.
Replying to a separate question on price rise in the Upper House, Chaudhary said that the
Government is regularly monitoring the price situation of major essential commodities and taking corrective action from time to time including supply-side measures to address inflation.
India’s headline retail inflation rate, as measured by the Consumer Price Index (CPI), stood at 7.01% in June 2022 from 7.04% in May 2022. It has remained above the Reserve Bank of India’s upper band comfort zone of 6 per cent.
Giving more details, the Minister stated that the Central Government on May 21, 2022 cut excise duty by Rs. 8 per litre on petrol and Rs. 6 per litre on diesel. Further, reduction in import duties and cess on pulses, rationalisation of tariffs and imposition of stock limits on edible oils and oil seeds, maintenance of buffer stock for onion and pulses, the inclusion of soya meal as an essential commodity in the schedule of the Essential Commodities Act, 1955 up to 30th June 2022 and imposition of stock limit on soya meal up to 30th June 2022 were carried out.
The Minister stated that soaring commodity prices and pandemic-induced supply-demand imbalances caused a rise in inflation rates worldwide including in India. The Russia-Ukraine conflict has exacerbated the inflationary pressures in crude oil, gas, and metals. Further, the onset of summer heat waves has led to crop damage and a rise in vegetable prices, the Minister stated.
