How falling rupee will affect your child’s future!

With rupee crossing Rs 72/dollar, education abroad will get more expensive; travelling too will be hurt. Neeraj Khanna, co-founder and director, Spark Career Mentors, sums up the anguish of many parents due to the steady decline in the rupee. "Several mid-senior level corporate executives have taken the tough call of not sending their children abroad. I know of a few students who suffered from depression due to the last-minute change in their education plans."

With the rupee crossing Rs 72/dollar in recent times, things suddenly don’t look too good on several counts. Education abroad will get more expensive, travelling too will be hurt, and for ones in the country, more expensive crude oil prices will stoke inflation.

Education
According to Khanna, parents who sent their child to study abroad last year are in an even worse state because they have not a choice, but to cough up a significantly higher amount for the next three years of undergraduate studies. However, the good news is that most would have already finished their payments this year and have landed in US campuses, say experts.

By the first week of September, banks would have already disbursed loans. Also, the tuition and other annual fees would have been paid, and students would have landed for orientation programmes. "Parents and students are relieved academic sessions have begun before they could witness the latest fall in rupee. However, for those weighing in the pros and cons of choosing the US as a destination for the next academic year, this is going to have an adverse impact," Arun Jagannathan, CEO and Founder, CrackVerbal, an overseas education service provider told Business Standard.

According to overseas education experts, for those still in the middle of making final tuition fee payments in the US will have to additionally shell out anywhere from Rs 400,000 lakh to Rs 600,000, compared to what they would have envisaged in March-April while accepting admission when the rupee was at Rs 65 against US dollar.

Students’ corner
"We advise students to look for scholarships to fund their study abroad. Many top-ranked colleges abroad offer scholarships to deserving candidates,” adds Kagzi. Students can also look for part-time work at the college to fund/offset your loans. It is a common practice for students to take up campus jobs, internships, teaching or research assistant roles to fund their education.

Vacation
If you have already booked your flights and hotels in advance, then the rupee depreciation will not affect you much. What will rise is the cost of food, local travel, tickets for sightseeing, etc. Sharat Dhall, chief operating officer (B2C), Yatra.com points out that the rupee has depreciated against the currencies of Europe, UK, US, Hong Kong, China and Singapore as well. So, going to such countries also have become more expensive.

Vacationer’s corner
Manmeet Ahluwalia, head of marketing, Expedia India says that those who are still in the research stage can plan to go to a Southeast country. Western Europe is more expensive, so you can travel to Eastern Europe. Even the number of days can be reduced from 15 days to 10 days. In case of accommodation, you may downgrade from a five-star to a three-star hotel. A country like Turkey whose currency has been on a free fall can be a good destination now, say experts.

International funds
There is a benefit for the investor from the depreciation of the Indian rupee against the dollar and other leading global currencies. The Indian rupee depreciates over time as inflation in India is higher. Due to that difference in inflation, the rupee tends to depreciate by two-three per cent annually. So if you build your investments in dollars, and over time the rupee goes from 70 to 100, then even if the US markets do nothing, you will still have a 30 per cent return. While domestic equity funds have a long-term capital gains tax of 10 per cent which is charged after one year. International equity funds are treated as debt funds.

Nikhil Banerjee, co-founder, Mintwalk prefers US funds currently. "These funds invest in companies that are listed in the US. Usually, a large-cap stock listed in the US is a world leader." "An Alphabet, Facebook, etc may be listed in the US, but they are actually earning from countries like India. These companies have global operations." "Their stock prices benefit from their underlying growth in India. Therefore, even if one is investing in a US-listed company, one is actually taking a global exposure," he says.

BY Sanjay Kumar Singh, Vinay Umarji & Priyadarshini Maji