Imported inflation & rising import bill a concern, but not in near term

THE RUPEE'S RELENTLESS decline against the US dollar has intensified chances of imported inflation as well as widening of the current account deficit (CAD).

- PRIYANSH VERMA, ARUNIMA BHARADWAJ & SANDIP DAS

However, many economists feel India's exporters will benefit from the currency's fall and arrest its impact on the CAD, which anyway is not much worrisome at present.

Economists say that exporters may derive some benefits in terms of better pricing but the potential tariff imposition by the US may impact overall global trade sentiments. "Domestic manufacturers may benefit as competition from imported goods will be less due to the depreciation factor. We don't expect any material change to our CAD forecast of 1.3% in FY25 and FY26," said Suman Chowdhury, chief economist, Acuite Ratings & Research. In the first half of FY25, the CAD stood at 1.2% of the gross domestic product (GDP).