In Mumbai, rupee free-fall means no movies, no vacations, no autos

Ashok Wadge is a disturbed man these days. He feeds a family of six, pays for the education of his children, looks after his elderly parents, and then squeezes out an EMI for his house in Mumbai - and he manages all this in Rs 20,000.

With the rupee weakening day by day, and inflation showing no signs of slowing down, his problems have only got worse. Almost all banks have raised their lending rates; he now shells out 30 per cent of his salary towards EMI in the beginning of the month.

As a result, he has cut down on other expenses.

"I will have to cut down on entertainment and movies. There will be no holidays. Now we have to stand for the bus where we used to travel in auto," he tells NDTV.

With the Reserve Bank of India squeezing liquidity in an effort to control the downward spiral of the rupee, banks were forced to raise their base rates, the rate to which all loans are linked. The base rate is the rate below which a bank cannot lend, and an increase in the base rate would imply an increase in lending rates for home loans, car loans and personal loans as well.

On Monday, private lender Axis Bank increased its base rate by 25 basis points to 10.25 per cent. HDFC Bank, YES Bank, Kotak Mahindra Bank and Andhra Bank have hiked their rates earlier this month.

Consumers would start feeling the pinch once bigger lenders like State Bank of India and ICICI Bank (the country's largest public and private lender, respectively) announce rate hikes.

ICICI Bank on Friday raised interest rates on fixed deposit by 0.25-0.75 percentage points mainly on short-term deposits, which is been seen as a precursor to rate hikes.

While consumers who have taken home loans on fixed interest rates won't be affected, those with floating rates will be hit.

Keki Mistry, vice-chairman and CEO of Housing Development Finance Corporation , tells NDTV: "We need to see a reversal of the RBI action, where they tightened liquidity."

Consumers are not the only ones worried with the RBI's actions. The real estate industry is also concerned.

"All in all, the precipitous fall of the rupee is affecting the common man because a large number of components have been imported in the last couple of years and also the fact that it is causing inflation," says Hiranandani Group managing director Niranjan Hiranandani.