‘New RBI guv has been dealt an impossible hand…’: Arvind Subramanian’s 8-point take on rupee’s future

Former CEA Arvind Subramanian has labeled India’s current currency crisis as a daunting challenge for new RBI Governor Sanjay Malhotra, pointing out the inevitability of the rupee’s decline and the tough choices facing the central bank. Subramanian criticized the policy framework inherited from Malhotra’s predecessor, Shaktikanta Das, which led to a breaking point in the rupee’s stability, with only two options available for the RBI: gradual depreciation or sudden significant drop, both carrying risks of speculative pressures and economic disruption. The recent record low of the rupee against the dollar, driven by various factors, has prompted Malhotra to consider allowing greater currency flexibility, although Subramanian cautioned of impending turbulence and the formidable challenge of balancing export competitiveness with oil import costs for the RBI.

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