
Former Chief Economic Advisor Arvind Subramanian has expressed his views on the challenging currency situation that India is currently facing, particularly highlighting the tough task ahead for the new Reserve Bank of India Governor, Sanjay Malhotra. In a detailed analysis, Subramanian presented eight crucial points explaining why the decline of the rupee is imminent and the difficult decisions that the central bank must make moving forward.
a gradual depreciation of the rupee or a sudden and significant drop, both of which come with their own set of challenges and consequences.
The recent record low of the rupee against the dollar, driven by various factors including foreign outflows, rising oil prices, and a stronger dollar, has added urgency to the currency dilemma. Malhotra, who took office in December, is reportedly inclined towards allowing more flexibility in daily currency fluctuations compared to his predecessor's strict controls. Despite this shift, Subramanian cautioned that the path ahead would not be smooth, predicting turbulence and discomfort as the situation unfolds. Balancing the demands of exporters, who favor a weaker rupee for competitiveness, with the concerns of high crude oil imports that are directly impacted by a depreciating rupee presents a significant challenge for the RBI, as highlighted by Subramanian.