Variations in exchange rate of Indian rupee and impending general elections
Sarita Singh and Anil Kumar Nagar
Indicators of economic development were progressed well in the last ten years (2004-2014). The last two years were a setback as GDP growth rate was below five percent. Indian rupee’s exchange rate is the indicator of its external value. Exchange rate fluctuations alarm about monitoring parameters of foreign trade, balance of payments, FDI flows, FII flows etc. India witnessed general elections in 2009 and 2014. Rupee’s bilateral exchange rate against U.S. dollar varied wildly in preceding years of both the elections. The exchange rate variation was studied. It influenced the sentiments of the voters in relation to government’s capacity to manage the financial issues. As a result of it political parties in opposition took an extra advantage by default. Nominal effective exchange rate and real effective exchange rate are the phenomenon of rupee’s external competitive value. RBI and central government’s data has been presented together to draw a rational picture of related economic scenario of the country in the last ten years. Forecasting model of exchange rate was also discussed. Bilateral exchange rate of rupee against some key currencies has been compared for a balanced analysis. Trade pattern in 2004-05 and 2013-14 has been compared for six major trade partners. India’s GDP growth rate, external debt, forex reserves, current account deficit, capital account balance and their percentile data has been shown for a rational look on economic stability. Trade pattern of I has been studied by (Banerjee and Roy, 2014)  also made some clarity on the issue. India International monetary fund data has been collected for showing growth pattern of some countries for comparative view. The objective of the paper is to present the balanced view on rupee’s external value rather than pin pointing some sudden jerks.