Rupee at 91: Why your monthly budget could feel the shock

As the Indian rupee slides past 91 mark against the US dollar, experts Swapnil Kothari, president of the Council for Fair Business Practices, and Mitali Nikore, chief economist and founder of Nikore Associates, have warned that the issue no longer remains just academic.

Speaking with The Federal, they argued that the weakening currency affects everyday costs — from household appliances to travel and healthcare — and should be a “kitchen-table conversation” for Indian families.

Grassroots implications

The rupee’s slide has been widely discussed in macroeconomic terms — trade balances, foreign exchange reserves and exporter competitiveness. However, Kothari argued that what is being missed is its impact on consumers on the ground.

Also read: The rupee is not just falling, it is bearing the burden of boosting exports

“People generally talk about it only from the macroeconomic perspective — that the dollar has risen, that exporters and importers have to worry,” he said.

“But what about simple people like you and me?”

Kothari explained that while importers and exporters may have hedging strategies, ordinary households face price hikes as companies pass on higher costs. “They are not going to absorb the cost themselves,” he said. “What they manufacture at Rs 125, they might sell at Rs 126. That seems small, but when multiplied across millions of products, prices climb noticeably.”

He noted that simplifying the Goods and Services Tax will do little to offset rising costs, and pointed to MSMEs (micro, small, and medium enterprises) as vulnerable, cautioning that such enterprises are barely growing even though they are critical to India’s aim of becoming a developed economy by 2047.

Consumer durables to become costlier

Kothari also highlighted how consumer durables — such as refrigerators, televisions and cars — could all become more expensive due to imported components. “Even if the Mercedes or BMW is assembled here,” he said, “some essential parts are imported. If those costs go up, the prices of the final product go up, even if only by a few lakhs.”

Also read: India's paradox: Rising economic indicators vs falling standard of living

For many middle-class families, these items have shifted from luxury to necessity. “If basic refrigerators, TVs and cars become more expensive, that impacts household budgets,” Kothari added.

He rejected the idea that the weakening rupee is purely academic or distant from daily life. “Its impact is what we are going to focus on here,” he said. With the rupee having lost about five per cent of its value in 2025 alone, this depreciation is one of the sharpest in years.

The consumer view

Addressing everyday expenses, Kothari said that daily staples such as tomatoes and onions are less affected because they are domestically produced. But manufactured goods — part of the rising middle class’s consumption basket — are sensitive to currency movements.

“Look at Sony televisions,” Kothari said. “A model that was Rs 25,000 could easily become Rs 26,000. Retailers will say their margins are thin, but costs have gone up upstream.”

He also linked these price increases to the broader idea of a developed India, saying that true development means affordable access to consumer goods, cars, travel and education — all of which can be undermined by currency depreciation.

Reducing dollar dependence

Nikore pointed out that while the rupee’s fall is concerning, it must be understood in the context of global currency trends. Speaking from Jakarta, Indonesia, she compared India’s situation with that country, where fiscal issues have similarly weakened the rupiah, its national currency.

“The bigger challenge,” she said, “is that we are not tracking and visualising the data itself. We talk about growth rates — eight per cent GDP growth, seven per cent quarterly growth — but much of those gains are eroded by currency depreciation and import pressures.”

Also read: GDP growth rebounds, but average Indian’s living standard dips — How Indian economy fared in 2025

Nikore underscored that India’s dependence on the dollar is deep and reducing that reliance will take decades. She said that reducing dollar dependence through import substitution, diversification of reserves, and better forex management are necessary steps.

RBI's role

Nikore suggested that the Reserve Bank of India (RBI) can play a more proactive role. Over the past few months, she said, the RBI has let the rupee slide somewhat intentionally to boost export competitiveness amid global tariffs. But she added that now the central bank should think about selling rupees in global markets to support demand and stabilise the currency.

She also emphasised negotiating alternative arrangements for oil and gold purchases, which constitute large portions of India’s dollar demand, and encouraging foreign investment to increase rupee inflows.

Domestic production

Both panelists stressed the need to reduce import dependence through domestic production. Nikore noted that while schemes such as 'Make in India' and the Production Linked Incentive (PLI) have helped, sectors most exposed to forex risks — especially consumer durables and FMCG — still rely heavily on imports.

Also read: From King’s face to Mahatma Gandhi: Tracing 78 years of the rupee

She called for a comprehensive audit of India’s import composition to identify areas where competitive domestic production can substitute imports, especially in goods that are essential for consumers.

Weaker rupee, less buying power

Kothari addressed how the rupee's depreciation affects jobs and incomes. He pointed out that a weaker currency doesn’t necessarily translate into higher wages. “No employer is going to say, ‘Because the rupee has depreciated, let me raise your salary,’” he said. That means purchasing power falls, even if headline growth numbers remain strong.

He explained that rising fuel prices eat into household budgets and medical costs may climb if imported equipment becomes costlier, leading to higher health expenses and insurance premiums.

Is govt addressing domestic concerns?

Kothari criticised what he described as the government’s focus on global forums such as Davos rather than addressing domestic concerns. He urged policymakers to ensure imports remain affordable and to consider how the upcoming national budget can address these issues.

Also read: Foreign investors largely stayed off India in 2025, may do so in 2026 too

He argued the government should focus on policies that ease costs for everyday consumers rather than only promoting high-level economic achievements.

More 'shrinkflation' to come?

Looking ahead, Kothari said that households may need to cut discretionary spending, with overseas travel and foreign education becoming more expensive. He also discussed “shrinkflation”, where product sizes shrink while prices stay the same, as companies find ways to cope with cost pressures.

He illustrated this with examples — from biscuit packets getting smaller to airlines discreetly reducing items served — saying these subtle changes can help firms manage costs without shocking consumers.

Crisis leads to reforms

Toward the end of the discussion, Kothari referenced the idea that policy reforms in India often follow crises, citing the economic liberalisation of 1991. He asked whether the rupee’s fall is serious enough to prompt meaningful reforms or whether policymakers will downplay the issue until another big crisis strikes.

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