The Rupee’s real worth: Time for a new narrative?

India is the world’s third-largest economy. Its currency deserves to be judged by what it builds and buys — not by an exchange rate inherited from history

India stands today as the world’s third-largest economy in purchasing power terms, posting growth rates among the highest globally, with record foreign exchange reserves and equity markets at historic highs. Across a world riven by geopolitical conflict, supply-chain fractures, and shifting alliances, India has demonstrated macroeconomic resilience that most nations can only aspire to.

And yet, a curious paradox persists. Every time the rupee moves — from 85 to 87 to 90 against the dollar — headlines speak of “decline”, citizens express alarm, and a narrative of weakness takes hold. This perception is not merely inaccurate. It is damaging to the economic confidence that sustains growth itself.

A civilisation that understood value long before the $ existed

India’s monetary culture dates back to ancient times. The subcontinent was minting coins as early as the 6th century BCE, with the silver punch-marked karshapana circulating across the Gangetic plains. When Pliny the Elder wrote in the first century CE that Rome was hemorrhaging fifty million sesterces annually to India for spices, textiles, and precious stones, he was not describing charity - he was describing a trade surplus. Gold coins minted in India were widely trusted for their purity and were used extensively in trade and commerce.

A civilisation with this monetary depth cannot reduce the worth of its currency — or the confidence of its people — to the daily movement of a bilateral exchange rate. The true strength of a currency lies not in how many units equal a dollar, but in the productive capacity, institutional resilience, and civilisational confidence that stand behind it.

The fallacy of exchange rate absolutism

The fundamental error in public discourse is treating the nominal exchange rate as an absolute verdict on currency strength.

The Japanese yen trades at roughly 155 to the dollar; the South Korean won at over 1,500. Are these failing economies? Japan is the world’s fourth-largest economy, while South Korea is a technological powerhouse. Exchange rates reflect historical denomination choices and monetary policy - not economic weakness.

What matters is purchasing power within the domestic economy. The World Bank’s International Comparison Program places India’s GDP at approximately $18 trillion in PPP terms - third globally, behind only the United States and China. One rupee buys considerably more in India than its dollar-equivalent would in America. The Big Mac Index by The Economist is often cited as a popular indicator suggesting that the Indian rupee is undervalued against the US dollar, based on the lower price of McDonald’s burgers in India compared to the United States.

The strategic advantage of a competitive currency

A rupee that is not artificially strengthened serves a vital function: it maintains export competitiveness. Remittances reached a record $135.4 billion in FY2024-25. A stronger nominal rupee would reduce the rupee value of these inflows, directly diminishing earnings for millions of families. Export sectors from pharmaceuticals to textiles to software benefit from a competitive exchange rate. This is not an argument for a persistently weaker rupee, but for a currency strategy aligned with India’s own economic conditions and national interests, ensuring exchange-rate policy serves India-first monetary priorities.

The path forward

Internationalising the rupee through bilateral trade settlement, and advancing the digital rupee through India’s CBDC initiative, offer pathways to reduce dependence on dollar-clearing. Prime Minister Shri Narendra Modi’s recent call for Indians to choose made-in-India products, moderate gold imports, and favour domestic tourism is not merely a patriotic appeal — it is sound economic policy. Gold imports are a major drain on foreign exchange; every rupee spent on domestic tourism circulates within the national economy rather than financing outflows.

India holds unparalleled potential in heritage tourism. With 44 UNESCO World Heritage Sites and living traditions spanning millennia, it offers experiences unavailable anywhere else on earth. The recently inscribed ‘Maratha Military Landscapes’ add to a portfolio of globally unique experiences that can strengthen both economic activity and the currency’s underlying domestic demand base.

Atmavishwas as economic policy

For an economy growing at record rates with historically low inflation, the currency exchange rate is a data point, not a destiny. Let the rupee be judged by what it builds, what it buys, and what it enables for a billion people striving towards prosperity. That is its true value — and that is the story India must have the confidence to tell.

Let the rupee be judged by what it builds, what it buys, and what it enables for a billion people striving towards prosperity. That is its true value — and that is the story India must have the confidence to tell

Vivek Aggarwal, IAS, is Secretary, Ministry of Culture, Government of India. He has previously served in financial intelligence, urban infrastructure, digital agriculture, and economic governance; Views presented are personal.

Shah Faesal, IAS, is an officer working in the creative economy division of the Ministry of Culture, Government of India; Views presented are personal.