In what can be seen as a thumbs up for Prime Minister Narendra Modi’s policies, the Indian Rupee is now valued at Rs 64 for every Dollar, from the low of Rs 69 for every Dollar. Analysts and industry trackers had expected the Rupee to stay at 68, but the surge in capital inflows in the form of FPIs, FIIs and FDI has strengthened the Rupee. Foreign investors invest in businesses and financial markets only when they see they see their investments grow and multiply. This can happen only when there is a conducive atmosphere for doing business.
Many economists believe that with the passage of the Goods and Services Tax Act in Parliament, there will be a sharp fall in the amount of taxes that corporations, small businesses and consumers pay. Also, by making it difficult for black money hoarders to avoid taxes, the Govt now expects to drastically increase the amount of taxes that it collects. A major advantage of the GST is that manufacturers now don’t need to have warehouses in each and every state and avoid the Central Sales Tax (CST), thus making the cost of conducting business very low for manufacturers and retailers.
Another major reason for the influx of capital in India is the stupendous victories of the BJP in local assembly elections that has allowed the Govt to pass the GST and many other industry friendly laws. A strong Rupee is very good news for India as this means more capital for businesses to expand and grow thus ensuring that more jobs are created.