For fuel, price hikes will do the job. For rupee, a hike in interest rates, one-time dollar bonds issue for NRIs & capital gains tax rejig will do the trick. Remember, our macros are just fine
Media (and social media) headlines are near-apocalyptic. They tell you that an incessant fall in the value of rupee (against dollar) suggests an impending economic disaster. They beg the question, have we muddled into a 1991 (or 2013 taper tantrum) redux?
No, is the blunt answer. Not by a very long mile.
Finance minister Nirmala Sitharaman indexed the issue to 3Fs (fertiliser, fuel, FX). Getting further down to brass tacks, it’s really a currency market issue, centred on the global demand-supply of dollars.
Disclaimer
Views expressed above are the author’s own.
END OF ARTICLE
