Software & Finance - Monthly Magazine Online

Volume 4 - Issue 6

June 2014

Impact of INR (Rupees) after Indian Election in 2014

Narendra Modi became the 15th Prime Minister of India and is the leader from Bharatiya Janata Party (BJP). He has got a very good name and fame when he served as a Chief Ministers of Gujarath from 2001 to 2014. The great political victory for Modi is winning the 2014 election as a single party majority. After a gap 30 years, India has got a prime minister with single party majority is a great news for India.


His policies and decisions are important to stock market and people living in the country. Stock market reacted very positively since Modi can bring great changes to the country. Of course, it would be true. The middle class people in India can lead a happy life in the coming years because of controlling inflation and more leaning towards deflation. The rupee is getting stronger and stronger against major currencies. This situation will continue for the next couple of months or until when the other countries such as USA, UK consider rising the interest rates. There would not be any surpise if the USD/INR conversion goes below 50 again. It would be a very bad news for Indian living in USA, UK and other foreign countries. In the same way, Indian IT companies will get affected a lot with low USD/INR conversion. Stock market usually does not like stronger local currency.


INR can go stronger by rising the interst rate. It would be primary factor that can collapse the market. It is an excellent time to sell your real estate properties in India since you will not get this good price the next decade. I mean the real estate prices will keep going south and to reach the current level, you may have to wait more than 10 years. If you want to buy a real estate property, then you will have ample amount of time in the coming years.


With the stronger INR, the gas prices (petrol / diesel) will go down and it will bring down the cost of food and transportation cost. This will make the middle class people to lead happy life. Of course, this will not become true without taking pain. Meaning the upper middle class and rich people in the country will start suffering since they would have alreadt bought the homes and real estate properties as investment. Since there will not be any growth in their asset values in the coming years, would be hard to digest.


Currently people in IT sector are overpaid and in some cases, they are equally paid as if living in US$. The other sector like medical and agricultures are getting undervalued. With Modi's lead, the importance will be given to agricultures as well as medical. There will be huge demand for doctors and farmers. Note that in early 1990's, Civil department is Engineering very much undervalued but now the Civil department is in huge demand for the last couple of years because of huge construction demand. Now eveyone wants to get into IT field and make easy money by losing their good health and increasing mental stress, India is generating more software engineers than what is needed for the next couple of years. There will be huge lay-offs in IT industry with the stronger INR. That can also help collapsing the real estate prices in the counrty.