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Weak Rupee Against Dollar Can Create Employment Crisis As Gems And Jewelery Sector And Startups To Hit Most

Weak Rupee Against Dollar Can Create Employment Crisis As Gems And Jewelery Sector And Startups To Hit Most
Written by Arindam

Weak Rupee Impact On Employment: Rupee is making a new record of falling. On Thursday 19 May 2022, the rupee closed at its all-time low of Rs 77.73. Since the beginning of the Russia Ukraine War in February, the process of depreciation of the rupee is not taking its name to stop. RBI has made continuous efforts to save the rupee from falling, but due to the withdrawal of its investment by foreign investors, the rupee is under pressure. RBI has said in its State of Economy Report that as of May 6, India has foreign exchange reserves of $ 596 billion, so that only the estimated imports of the next 10 months can be met. The foreign exchange fund has decreased by $36 billion since Russia invaded Ukraine.

Employment crisis in gems and jewelery sector
The foreign exchange fund is decreasing, but the weakness in the rupee has started affecting employment. Especially in the Gems and Jewelery sector, which was already in trouble due to the war between Russia and Ukraine, now the weakness in the rupee has increased the problems of this sector. Surat is considered to be the Diamond Hub of the country. And in Surat, many companies associated with diamond carving have sent 2.5 lakh artisans on leave. According to these companies, they import rough diamonds from Alrosa, a Russian diamond company, and then carve it and export it. America has banned Alrosa. Whereas Alrosa has 30 percent share in diamond imports. Surat’s diamond companies say that at present they are short of work, so they have no option but to send the workers on leave.

15 lakh people have got employment in the diamond industry of Surat. Which is 30 percent of the total employment in this sector. Employees unions say that the purpose of sending them on leave is that during this time the employees will not have to pay salaries. At the same time, if this crisis is not over, then companies can also remove these people from employment.

Gems and jewelery sector in crisis
India is the largest importer and exporter of gems and jewellery. The strengthening of the dollar and the fall in the rupee are having a bad effect on this sector. The country’s gems and jewelery companies first import gold to diamond, for which payment has to be made in dollars. But despite having expensive dollars, export companies associated with the gems and jewelery sector are not getting the benefit of it. Because the exporters will get the benefit of the strengthening of the dollar only then there will be demand in the market. But countries around the world are battling inflation. So the demand has decreased. There is no demand for the raw diamonds that people have prepared by taking these by importing them. Due to which the people of this sector are worried. Due to lack of demand, there may be a crisis of employment in this sector.

Startup also started layoffs
In fact, for the past several years, the startups of the country were getting a lot of funding from foreign through private equity. But due to the strengthening of the dollar and the global economic situation, private equity investors are now hesitant to pour money. Anyway, only 23 unicorns out of 100 are benefiting. This is the reason that even the startups that provide employment are now retrenching. Vedantu has fired more than 600 people so far in May alone. At the same time, Cars24 is also going to lay off 600 people. It is believed that 5000 people can be laid off in the coming days.

Eclipse on job creation due to expensive loans
Central banks around the world were increasing interest rates due to inflation. After the retail inflation rate at 6.95 per cent in the month of March, the RBI was also forced to increase the interest rates. If RBI had not done so, investors would have sold more, which would have further weakened the rupee. But the effect of making the loans expensive of RBI is also having an effect. People’s EME is getting expensive. It is getting expensive to take loans from MSME to other industries. Due to expensive home loans, the crisis on the real estate sector may deepen as the housing demand will decrease. Its impact can have an impact on employment generation in all sectors related to the construction sector.

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Arindam

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