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Who wins from India’s economic woes?

James Tapper
Dan Istitene | Getty Images

In almost every crisis, someone stands to profit.

The Indian rupee has dropped sharply in recent months, sliding from 54 at the start of 2013 to an all-time low of nearly 69.

Although the currency has recovered somewhat, the decline has harmed India's fragile economy, and cost some investors a fortune. The country relies heavily on imported oil, and a weaker rupee means higher energy bills for consumers and businesses.

(Read more: Will the rupee reprieve be over soon?)

But for many exporters, call centers and travel companies, the rupee's slide is good news — for the most part.

And the big winners in the rupee's 20 percent fall against the US dollar since May come from a far more surprising constituency: politicians.

Taper delay is a lucky break for India

India's main political parties are believed to have placed their electoral war-chests off shore — away from the prying eyes of tax inspectors and election monitors in advance of the general election, likely to be called for May 2014.

"Political parties who have stashed the money away for precisely this purpose are now bringing it in," Professor Jayati Ghosh told the Global Post. "These are big gainers. For the same $100,000 they are getting a lot more rupees."

For the last general election in 2009, India's political parties spent about $2 billion, of which a quarter was spent on buying votes for cash, according to the Center for Media Studies, a Delhi-based think tank.

This time round voters seem even greedier, according to politicians. Some are apparently demanding a 'red note' of 1,000 rupees to buy their support.

(Read more: Brewers tap India's thirst for potent beer)

In June, a senior opposition politician was caught on camera complaining he had spent 80 million rupees to get elected — about $1.65 million back in 2009. At today's rates that would be 105 million rupees, 26 times the maximum sum of 4 million rupees ($63,000) that candidates are allowed to spend.

Money accumulated from bribes and kickbacks can be hidden off-shore either through shell companies and bogus contracts or through "hawala"— an illegal Indian network used to transfer money without using banks.

Professor Ghosh, one of India's leading economists and a lecturer at the prestigious Jawalal Nehru University in Delhi, said: "Before every general election there's a lot of money coming into India — usually through the hawala route but sometimes even legally – for pre-election expenses.

"It's not mentioned at all. It's all under the carpet in mainstream discussions but it's a very big factor.

"We have elections in three states in November so some money must already be coming in for that.

"And then we have the big one, by April, so in the next six months there will be money coming in for that. Certainly this is a very old pattern in India."

Here's a cure for the rupee's woes

Boon for call centers

Back in 2009, the rupee plunged 31 percent in the year before the election, due mostly to the global financial crisis, when US institutions pulled out of emerging markets to shore up accounts at home.

(Read more: Why the rupee storm isn't over yet)

It was easier then for the Indian economy to shrug off the problem. India's "tiger economy" was growing at nine percent, fueled by western companies taking their IT departments and call centers off-shore.

Fast forward to 2013 and the off-shore specialists — known now as business process outsourcing firms or BPOs — have been struggling.

India's BPO industry has suffered from competition from the Philippines and from the end of a 10-year tax break for companies in the IT sector.

So the low rupee may give the sector a much-needed push, especially as a typical BPO earns about one-third of its revenue in dollars.

"India has lost a lot to the Philippines" Partho Sarkar, CEO of Hinduja Global Solutions, told the Times of India. "The weakening rupee will make us more export-competitive."

Beyond tech

The Indian government hopes that exports of all varieties will revive its economic fortunes.

Officials are particularly enthused by t-shirts and the like.

(Read more: India's August trade deficit shrinks as exports rise)

Anticipating a boom in exports, the Prime Minister Manmohan Singh and his ministers are considering a 10 percent duty on raw cotton exports.

Farmers harvested a bumper cotton crop this year. Instead of selling the raw materials to other countries, the government hopes the duty encourages local manufacturers to make more t-shirts and coats for export.

Professor Ghosh told GlobalPost that exporters may end up as winners — eventually — if the rupee remains low. "Exporters whose demand depends a lot on price — garments, leather goods things like that — these are all people who place their orders three to six months in advance, so it might be reflected in new orders that might show up six months from now."

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But she said there are problems for exporters to overcome, not least the increase in oil prices that need to be paid in dollars. India is heavily dependent on imported oil.

"You need a longer, more sustained decline, and it would have to be a decline in the real exchange rate.

"If our inflation continues to be higher than global inflation and if the change in inflation is more than the market depreciation, then you're back where you were."

Taj on the cheap

Perhaps if call centers and cheap t-shirts aren't enough to boost India's ailing economy, then a cut-price Taj Mahal might work.

(Read more: India's crisis a 'wake-up call': Stephen Roach)

Yet the same problems exist. The number of foreign tourists in July rose by 7.9 percent on 2012 according to figures from the Ministry of Tourism released in September, but this wasn't enough to make up the shortfall, with revenues actually decreasing in dollar terms by 1.3 percent.

"No one takes India holidays from overseas on impulse," Gour Kanjilal, the executive director of the Indian Association of Tour Operators, told the Global Post in an email.

"They think, plan and then decide. There is a mood of optimism and some hotel chains have indicated that they have increased reservations and getting good enquiries from overseas."

He said the high cost of fuel would put pressure on airlines to raise prices for internal flights which are often a part of foreign tourists' itineraries.

But the outlook was good for the coming months if travelers considered India to be cheaper than Thailand, Hong Kong and Malaysia, Mr Kanjilal said.

"With the fall of rupee, this gap between India and these countries has shrunk. We can expect double digit growth in inbound traffic."

There had been a particular increase in enquiries from eastern European countries, he said.

(Read more: India swamped by a wave of growth downgrades)

"Only problem is the air connectivity and that will be pinching them. But inbound looks very positive."

But the surest bet for Indians in the next few months is the general election, according to Professor Ghosh.

"Elections are employment generators," she said. "The trouble is it's not a very stable form of employment."