Srinagar: The Indian rupee hitting a record low of 84.40 against the U.S. dollar this week has mixed implications for Jammu & Kashmir’s economy, economic experts say.
While exporters and recipients of remittances could see gains, the rising cost of imports and inflation will likely pose challenges for several domestic sectors.
Ziraat Times spoke to various sectoral experts in Kashmir and Jammu regions to understand the impact on various sectors. Here is what experts estimate:
Sectors Likely to Gain
Handicrafts export advantage: Kashmiri handicrafts, including pashmina shawls, carpets, and papier-mâché, are largely exported. A weaker rupee makes these products more competitive in international markets, potentially boosting export revenues.
Tourism Boost: International tourists find it cheaper to visit Kashmir, increasing demand for handicrafts and souvenirs.
2. Horticulture and fruits (e.g., apples, walnuts, saffron)
Improved export competitiveness: Exports of horticultural products are likely benefit from the currency devaluation, as buyers in foreign markets will find them more affordable.
Increased foreign demand: Products like Kashmiri saffron, which have niche markets abroad, may see rising sales due to lower prices in dollar terms.
3. Higher value of remittances: Kashmiri families receiving money from relatives working abroad will see an increase in the rupee value of remittances, bolstering household incomes.
Sectors likely to lose
1. Real Estate: Increased costs for imported materials:
Construction costs for real estate projects in Jammu & Kashmir are likely to rise due to the higher cost of imported materials like hardware, timber and other inputs.
Weaker domestic demand: Higher inflation caused by rupee depreciation could dampen demand in the real estate market.
2. Agriculture tools and inputs: Rising costs:
Fertilizers, agrochemicals, and machinery, much of which is imported or priced based on global markets, will become more expensive. This could increase input costs for farmers and hurt profitability.
Impact on small farmers: Marginal and small-scale farmers in Kashmir, already facing challenges, may struggle to afford essential inputs.
3. Foodgrains (e.g., rice and other staples): Costlier imports
If any foodgrains are imported to meet demand or due to shortfalls, the weaker rupee will make them more expensive, leading to inflationary pressure on staple foods.
Local competition: While J&K produces significant rice locally, increased prices of inputs like fuel and fertilizers could indirectly raise production costs.
**Tourism and Hospitality**: While international tourists might find Kashmir more affordable, domestic tourists could face higher costs for travel and accommodation due to inflation.
Subsidies on fertilizers and agrochemicals might need to increase to cushion farmers, straining the UT government’s finances.
