IIF, 1st October 2007: Prof. J.D. Agarwal, Professor of Finance & Chairman of Indian Institute of Finance has urged the Government to ensure that the producers of goods and providers of various services with high contents of imported raw materials or imported goods to reduce prices and pass on the benefit of arising from the appreciation of Indian Rupees against U.S. dollar. There has been appreciation of Indian Rupee against U.S. dollar by over 20 % in the last two years. The industry and trading houses have pocketed the profit arising out of the appreciation instead of passing it on to the consumers. The importers and producers goods with contents of imported raw materials also get benefited for lower payments of customs and excise duty.

According to him most of the white goods such as Refrigerators, Air Conditioners, Computers, Laptops, Televisions, luxury Cars, Mobile Phones, branded software, freight and insurance charges by MNCs operating in India have high content of imports either in terms of raw materials or finished goods. The value of such imports of finished products or raw materials have become cheaper as the value of Indian Rupee has appreciated, but it has not been passed on to the consumers reiterated Dr. Agarwal. It has been seen in the past whenever the Rupee depreciated against Dollars most of the producers and providers of such goods in the Indian market raised prices of their products.

Dr. Agarwal feels that the industry pocketed all these benefits and did not pass on the benefits to the consumers.

According to Dr. Agarwal the providers of services, particularly, MNCs, Banks, Software Companies, Web hosting companies, Insurance Companies etc., price their services in India based upon Dollar values charged abroad. As the Rupee has appreciated by over 20% in the last 2 years there has been no reduction in the prices of services provided in Indian Rupees.

Dr. Agarwal urged the Government and also the industry to pass on the benefits accrued to them, to consumers, arising from the appreciation of the Indian Rupee. According to him this will in turn increase the demand of such goods and services; raise the standard of living of the people in the country, and result in higher economic growth and generate employment in the country.