How the Sharmas aided the rupee's fall

Blame it on this status-conscious family's fondness for imported goods

Satish Sharma, who runs a Chinese restaurant in Delhi, is worried over the falling rupee. He's not just worried about the possible hike in prices of imported sauces and inputs which he can't pass onto customers all the time. His elder daughter has enrolled into a university in the UK and she needs to pay 750 pounds by September. He's wondering if he should transfer some money into his younger daughter's account in Spain to hedge against a further slide in rupee. Sharma's younger daughter has been learning tennis at an academy in Barcelona. What the Sharmas don't realise though is they have been unknowingly aiding the rupee's slide.

In the last three years, the family of four has bought three Honda cars — together they consume at least Rs 20,000 in petrol every month. This ensures India's oil import bill remains high. India's oil and gold imports are the key reasons for its current account deficit. But it's the rising non-oil imports that are adding to the pressure on the rupee. And see how the Sharmas are abating it. Mr Sharma grew up drinking RC Challenge, McDowell and Old Monk. But ever since the family’s restaurant took off at a tony South Delhi neighbourhood, he drinks only Black Label or Chivas Regal. Indians like him bought imported booze worth Rs 1,150 crore last year.

Mrs Sharma does her bit to keep up with her new-found status. She buys the best clothes, toiletries and cosmetics for her daughters, many of which are imported. In Diwali, she buys several kilograms of dry fruits — cashews and almonds to be distributed among her well-wishers and staff, without realising how the purchase is aiding the rupee's fall. Indians imported cashews worth Rs 5,433 crore and almonds worth Rs 2,105 crore in 2012-13 and toiletries and cosmetics worth Rs 2173 crore.

For middle-class Indians, if a car is the first aspirational buy, LCD televisions have become a way of life for most upwardly mobile Indians. Many still can't afford a car but many homes have graduated from bulky picture tube-based colour TVs to more stylish, slimmer LCD and plasma TVs, almost all of which is imported. India spent Rs 3,411 crore on colour TVs last year. The government recently imposed a 35 per cent duty on flat televisions that passengers bring along with them while returning from abroad.

The Sharmas are not alone. Many upwardly-mobile families like them may be buying many imported stuff, besides oil and gold, and unknowingly aiding the rupee’s fall.