Breaking Views: If NRIs Are ‘Naxals’, Who’ll Save the Rupee?

Rupee is falling & stands at 72 against the US dollar. Experts believe rupee can fall further to 73-74 per dollar.

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Video Editor: Mohd Ibrahim & Vishal Kumar
Translator: Hera Khan


Rupee is constantly depreciating and now stands at 72 against the US dollar. Some experts believe that the rupee can fall further and stand at 73-74 against the US dollar. A 12 percent fall in just 8 months is unprecedented. Out of all emerging markets, the rupee’s fall has been the steepest.

While exports are not picking up, imports have risen. Hence the disturbance in the balance of payments, resulting in losses, is breaking all records.


  • Exports: $275 billion
  • Imports: $385 billion


  • Exports: $302 billion
  • Imports: $462 billion

Rise in crude oil prices is resulting in a surge in petrol and diesel prices. The weak rupee increases import bill. The bond market yield is rising about 8% and indicating how evryone is worried about the state of the economy now.

Why Is the Rupee Weakening?

One may say that global factors are responsible for the depreciation of the rupee – the US-China trade war and the sliding currencies of other emerging markets, so one must not blame the Indian govt for the weakening rupee. Because globally, the situation is adverse. Our economy is still growing at 8.2%.

But this is partly true. The other fact is that when the time is not right, how can you shoot on your own foot.

Let us look at SEBI's decree:

Foreign investors can invest in the Indian share market but not an Indian or an NRI fund manager. There is a suspicion of round tripping, that is, some Indians slyly take money out of the country and the same money is invested into the Indian share markets in the form of Foreign Portfolio Investment.

This announcement has left everyone in the markets worried. Anyway, there is a net FII outflow this year which means there is a lesser investment and more outflow in the market. The NRI whose patriotism was celebrated for the last five years is now a suspect. Just like an Urban Naxal, he is now an NRI Naxal. An honest NRI and a dishonest NRI are being treated as two peas in a pod.


Why can't we distinguish between thieves and honest businessmen despite the strict KYC (know your customer) rules? Why do we need new rules then? Because it is easier to shout slogans but tough to work with existing set of rules. Our regulators and officers are not being able to tell the difference between 'fund ownership', 'fund beneficiary' 'fund manager' and 'fund controller.'

According to SEBI, there is an unnecessary panic in the market. But foreign investors aren't convinced with this argument and are exploring other investment destinations. India needs investment in dollars now. A weak rupee will not boost exports because we are not competitive enough and there is an issue with our quality too. Expensive Crude oil will increase import bills which will, in turn, lead to inflation. RBI will not come to the rescue of the falling rupee. And in fact, it should not. There is a probability that RBI will not intervene unless the rupee falls to 74-75 a dollar. RBI might increase interest rates if inflation continues to rise. The govt charges more excise on petrol products. Citizens have been appealing for a reduction in prices. People are just speculating whether the government will think twice before reducing excise duty, especially before the state elections.

Which means that the capital which the private sector needs for growth, will be more expensive. As the country stands at the crossroads of elections, the rate of recovery of immovable debt is sluggish. Investors will wait for a clear picture before investing big amounts. But these are the concerns of common man. Growth figures do not win you votes.

(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)

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