Not losing sleep over falling Rupee: CEA
Chief Economic Adviser V Anantha Nageswaran on Wednesday said the government is not losing sleep over the declining rupee, which has breached the 90-level against the US dollar.
The rupee hit a historic low of 90.21 (provisional) against the US dollar on Wednesday, raising fears of inflation.The falling rupee is not affecting inflation or exports, he said on the sidelines of a CII event here.
Falling rupee helps outward shipment but makes import costlier. Import-dependent sectors such as gems and jewellery, petroleum and electronics may see lower benefits due to a rise in input costs, putting pressure on inflationary expectations.However, he expressed hope that it would improve next year.In 2025, the rupee depreciated about 5 per cent against the US dollar.
The rupee breached the 90-a-dollar level for the first time to settle at a fresh all-time low of 90.21 (provisional) on Wednesday, down 25 paise from its previous close, amid sustained foreign fund outflows and higher crude oil prices.Uncertainty over the India-US trade deal, along with the lack of Reserve Bank of India (RBI) effort to stop the slide in the local unit, put further pressure on the rupee, according to forex traders.
Speaking about gross foreign direct investment (FDI) target, Nageswaran said, “We may cross USD 100 billion this year.”During the first six months of the current fiscal, total FDI, which includes equity inflows, reinvested earnings and other capital, increased to about USD 50 billion as against USD 42.3 billion in the same period of 2024-25.
India’s gross FDI inflows for the financial year (FY) 2024-25 were approximately USD 81.04 billion, a 14 per cent increase over the previous fiscal year.The gradual increase in net FDI numbers after 2014 and until the COVID-19 pandemic has now run into geopolitical and geo-economic challenges, Nageswaran said.“That explanation should not stop there. We are aware that we have to crank up our game,” he said.
The government needs to address tax and non-tax issues, infrastructure-related issues, and also last-mile connectivity issues to increase FDI into India, he said.The nature of the terrain has shifted when it comes to FDI over the last few years, the CEA said.Post COVID-19, some of the countries started focussing on localisation of production rather than depending completely on foreign nations leading many companies to move their investment in those jurisdictions, he added.
