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Robust Rupee Hits Kerala Economy Hard: Study

This report on CSES study was published in The Economic Times on 05/05/2008

The Kerala economy, heavily dependent on remittances by non-residents, has taken a severe blow due to lower realisation of rupee for foreign currency, says a study which has pegged the loss to Non-Resident Keralites owing to appreciation of the local currency at about Rs 8,660 crore.

“The rising value of Indian rupee from 2003-04 has been inflicting a silent but a hard blow on Non-Resident Keralites (NRKs) by reducing the rupee realisation for their foreign currency remittances to Kerala. This, in turn, has hit the Kerala economy, dependent heavily on NRK remittances for its very sustenance,” says the study.

The study was conducted on the impact of the appreciation of rupee on NRKs by Prof K K George and Remya S of Centre for Socio-economic and Environmental Studies (CSES), Kochi.

The loss due to rupee appreciation per year ranged from Rs 1,026 crore in 2003-04 to Rs 1,890 crore in 2005-06. The loss touched Rs 1,310 crore in 2004-05 and Rs 1,667 crore in 2006-07, the study said.

The total loss during the four-and-a-half-year period from 2003-04 was Rs 8,660 crore, it added.

The rupee has been steadily appreciating against the USD from 2003-04 but it had been steep since the last one-and-a-half years, the study said.

Between July 2006 and December 2007, the rupee gained against the US dollar by 15.3 per cent.

Rupee appreciated between 7.1 per cent and 9.1 per cent in 2007 against all the currencies of West Asian countries which account for 89 per cent of Malayalee emigrants it said.