Rupee rise starts hurting; 275,000 jobs at risk

Rupee rise starts hurting; 275,000 jobs at risk
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First Published: Thu, Jul 12 2007. 03 09 PM IST
Updated: Thu, Jul 12 2007. 03 09 PM IST
New Delhi: The sharp rise in the rupee has begun to hurt, with exporters considering lay-offs that could affect 275,000 jobs, and the Government mulling scaling down export target to last year’s level of $125 billion from $160 billion set in April.
“At the rupee rate of 40 to a dollar, we will just about manage last year’s figure....our best bet would be $140 billion,” a highly placed official said.
He conceded that slowdown in export may result in loss of employment and “our estimates suggest that it could be in the range of 275,000 by December,” he said.
However, if the government announces a liberal package for the exporters, the impact could be reduced, “but job losses is bound to happen,” he said.
The Commerce Ministry is pressing for a package to exporters in terms of higher duty drawbacks and is reconciled to the dollar going below Rs40.
The rupee has appreciated 8.33% against dollar during January-June period. “The trends show that the rupee will continue to rise,” he said.
While export growth in May was 18% in dollar terms, in rupee value it was just about 6% as realizations went down.
Orders till July were contracted before rupee started appreciating. “Orders have now tarted receding and the impact would be seen from next month”.
According to a study by the Commerce Ministry, the worst hit sectors are labour intensive textile, leather, handicrafts, marine products, engineering, sports goods, toys and agri products.
The Government’s assessment comes a day after IT leader Infosys Technologies gave a not-so-promising guidance for fiscal 2007-08, while announcing its quarterly results.
While the impact on services sector firms is becoming visible in their balance sheets, “the worst affected are the merchandise exporters who operate on a razor thin margin”.
According to an estimate of the Federation of Indian Export Organisations (FIEO), 13.5 million people are directly employed in merchanised export sector.
“We are happy the government has realised our plight. We hope that immediate actions are taken to save the country’s export,” FIEO president Ganesh K Gupta said.
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First Published: Thu, Jul 12 2007. 03 09 PM IST