REASONS FOR RUPLE DEPRECIATIONOne of the main reasons for rupee depreciation is the widening of the current account deficit. In recent years, India has had a persistent current account deficit above 5% of GDP. This can be seen in the graph below. During the 1990s, India's merchandise exports increased rapidly in line with the country's economic liberalization. The impressive growth continued in 2002-2008, reflecting continued demand from its traditional and new markets even against the backdrop of slowing global demand, and likely reflecting India's relative competitiveness compared to other emerging markets. India's exports are also well diversified and include textiles and garments, automobile parts, chemicals and pharmaceuticals. As with the outflow of raw materials from the country, India's imports increased throughout the 1990s as demand for raw materials and consumer goods increased in an expanding economy. India's domestic demand remains much stronger than external demand, leading to a relatively sharp increase in imports. (India Country Monitor, December 2013, p. 18) The current account deficit was moderate until 2009, but it became alarming in 2010 as the West entered recession and the entire world was facing financial turmoil. So the Indian export sector was hit hard by the sharp and prolonged global recession, but imports continued because the Indian economy was doing well. India's large trade deficit is primarily attributable to increased non-oil imports and particularly capital goods. Therefore, the country's need for imports of energy and other raw materials and raw materials has continued to grow steadily. India's crude oil production is virtually stagnant at around 30 million barrels per year and coal production is at......middle of paper......intelligence: Report. EBSCO Industries, Inc. India Country Monitor. (December 2013). Country Intelligence: Report: India. EBSCO Host.India Schedules. (January 2014). 10 reasons why rupee is sinking with each passing day. MarketLine Industry Profile. (August 2013). Construction and Engineering Industry Profile: India. Market Line, p1-35. 35p. Money today. (January 2014). What to expect from various sectors in 2014. Money Today, p14-14. 1pm Money today. (September 2013). How RBI Steps to Check King Drop Affect You. EBSCO guest, p3-3. 1p.SKRay. (2007). The Indian economy. New Delhi, India: Asoke K. Ghosh, Prentice-Hall of India Privatte Limited.Vadra, R. (1 July 2012). State level initiatives for power sector reforms in India. Journal of Institute of Public Enterprise, 1- 2.Venkataraman, N. (August 2013). The fall in the rupee reflects alarming signs. CHEMICAL AFFAIRS, vol. 27 Issue 8, p9-10. 2p.