What will be the effect of the devaluation of the rupee?

When the rupee gets devalued, the import of goods becomes very expensive. Devaluation of the rupee can lead to inflation in the economy. Devaluation will discourage imports, but it can encourage exports. You can read about the Balance of Payment Crisis, 1991 – Causes and Measures to Control it in the given link.

Indian goods will become cheaper for foreigners. For domestic consumers it will become more expensive to travel abroad and study abroad due to devaluation.

Further readings:

  1. Forex Reserves – Meaning, Importance, Advantages (Notes for UPSC IAS exam)
  2. New Economic Policy of 1991 – Objectives, Liberalisation, Privatisation, Globalisation

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