Bangladesh’s taka has become almost equal to the Indian rupee, gaining over 30 per cent since January 2012. Bangladesh taka was 1.71 against a rupee on January 27, 2012. It closed at 1.19 a rupee on Thursday last while Pakistani rupee was 1.85 against a rupee on February 22, 2012, according to a report of The Indian Express. This shows the extent of damage to the Indian rupee, which has lost 13 per cent since May 22, 2013, alone, making it the worst performing currency among its Asian peers.
Experts say that though appreciation of currencies of the neighbours will help India gain competitive edge in exports, the gain is unlikely to be much given the minuscule share of trade with the two countries.
‘This will mean much higher trade deficit for Bangladesh. India and Bangladesh are competing in same markets. Garments are a big item for Bangladesh and we have ceded much ground to it. If taka is appreciating vis-a-vis rupee, it will no longer have the
competitive edge as the sectors the two countries deal in are highly price sensitive.
Indian exports will become cheaper and Bangladesh imports would go up, leading to higher deficit,’ Biswajit Dhar, director-general, Research and Information System for developing countries, told The Indian Express.
The pressure on the Indian rupee is the result of an unsustainably-high current account deficit which widened to 4.8 per cent of GDP in 2012-13 as against 4.2 per cent of GDP in 2011-12.
Further, due to both global and domestic reasons, growth slowed down to a decade’s low of 5 per cent in the last fiscal while per capita income rose by less than 3 per cent.
Fiscal deficit stood at 4.9 per cent of GDP during the fiscal, down from 5.1 per cent in 2011-12.
On the other hand, in contrast, Bangladesh’s GDP grew at 6.3 per cent in 2011-12, and is estimated to grow 7.2 per cent in 2012-13, averaging
6 per cent in the last three years.
It had a current account balance of 1.5 per cent of GDP in 2011-12 and is projected to have a surplus of 1.3 per cent in 2012-13. Its fiscal deficit grew to
stand at 5.1 per cent of GDP in 2011-12 as compared to 4.5 per cent
2010-11.
-With New Age input
