How India’s inflationary pressures will affect NRI savings, investments

How India’s inflationary pressures will affect NRI savings, investments

Dubai: Inflationary rises in the Indian economy is starting hurt consumers and investors - with NRIs facing uncertain returns on their savings and investments there. NRIs with expenses in India such as home maintenance, upkeep of the family, children’s education and parents’ medical bills are experiencing higher costs as a result of rising prices. Official data show India's retail inflation rate, measured by the consumer price index (CPI), at a 17-month high of 6.95 per cent in March, far above the Reserve Bank of India's medium-term target of 4 per cent for a 30th consecutive month. The biggest drivers of India’s inflation were food items. Of the top five sub-groups with the highest month-on-month increase in Index, four were food-related - oils and fats, meat and fish, fruits, and spices. NRIs in general are better off than their Indian resident counterparts in facing the purchasing power impact of inflation, thanks to the exchange rate depreciation of the rupee against all leading hard currencies. Currency depreciation mean a significant portion of the drop in purchasing power of NRIs in India is compensated through higher amounts of rupee their hard currency earnings fetch. For example, the rupee has depreciated more than 2