The Indian rupee has been sliding against the US dollar for some time now. It breached the 80 per USD mark and has been hovering at about the same level since then. Aggressive policy and market intervention may strengthen the rupee a bit but experts fear that it may continue to hover at around 80 only. With an overwhelming proportion of our international payment obligations being in USD, it is of little solace to know that the rupee has not depreciated as much against euro or the British pound.

Currency depreciation has an adverse impact on the masses who have to bear the brunt. Those who suffer directly include common people who have to make outward remittances to meet unavoidable exigencies like medical treatment, financial support for relatives or financing studies of their offspring.

Data from the Reserve Bank of India reveal that during the financial year, 2021-22, Indians remitted a total of USD 19,610.77 million under the Liberalised Remittance Scheme, which permits an individual to remit up to USD 200,000 a year for deposits, purchase of immovable property, investment in equity and debt, gifts, donations, travels, maintenance of close relatives, medical treatment, studies abroad and others. A break-up of the data would show that USD 8,505.49 million was remitted alone for the maintenance of close relatives (USD 3,302.37 million), expenses on medical treatment (USD 37.79 million) and studies abroad (USD 5,165.33 million). These make up 43.37% of the total remittances under LRS.

The average annual exchange rate of the rupee in 2008-09 was 45.99 per USD, which by May 2014 had slipped to 59.44. The pre-poll rhetoric had termed the slide in the value of the rupee as disastrous for the economy. People were made to believe that the new government would not only arrest the decline but would work to stabilise the rupee at a level of 40 per USD.

Alas, that was not to be.

Citizens continue to suffer and suffer severely. Had the exchange rate been maintained at the May 2014 level, the rupee equivalent of outward remittances under LRS in 2021-22 would have worked out to Rs 116,566 crore. At the current exchange rate of 80.03 a USD, Indians are being forced to part with as much as Rs 156,945 crore, an additional burden of 34.64%. Those travelling abroad had to shell out a whopping Rs 55,294 crore compared to Rs 41,067 crore if the exchange rate was maintained at the May 2014 level.

One could argue that forex deposit, immovable property, financial investments, gifts, donations, and international travel are luxuries associated with the rich who can afford such losses. This may, however, not hold for people who have to make outward remittances to support relatives, meet the cost of medical treatment or finance foreign education. The outgo of such people is now Rs 68,069 crore. If the rupee had been stabilised at the 2014 level, they could have done so with Rs 50,556 crore.

Outward remittances for studies abroad alone were USD 5,165.33 million during the fiscal year of 2021-22. The May 2014 exchange rate meant an outgo of Rs 30,703 crore. Parents shall have to part with Rs 41,338 crore at the prevailing rate. This means that each student shall have to shell out 34.64% more than the planned expenditure. Since parents would not jeopardise the education and the career prospects of their children, they will have to bear this humongous burden. Incidentally, Indians account for over 5% of the total number of students who leave their countries to study abroad. A reply to a query in the Rajya Sabha this month stated that the number of outbound students from India had increased from 7.35 lakh in 2019 to 11.33 lakh in 2021.

Most of these families liquidate their lifelong savings or resort to bank loans to meet educational expenses. They suffer a double whammy, bearing an extra burden due to currency depreciation and paying additional interest on loans. Taken together, they end up poorer by at least 44.6%.

Furqan Qamar is a former Advisor (Education) to the Planning Commission