Economist and former NITI Aayog Vice-Chairman Arvind Panagariya has urged against alarm if the rupee slips to the Rs 100-per-dollar mark, saying the currency could claw back lost ground once global conditions stabilise.
Speaking to NDTV Profit, Panagariya made the case for a hands-off approach by the Reserve Bank of India, arguing that the central bank should not step in heavily to protect a symbolic exchange rate level. "Don't panic at Rs 100 per dollar," he said.
In his view, the exchange rate serves a purpose during turbulent times. It acts as a buffer against external pressures, particularly when geopolitical tensions and global uncertainty are elevated. Preventing it from moving freely, he argued, defeats that purpose.
Panagariya also warned that an aggressive defence of the rupee carries a real cost: it could steadily deplete India's foreign exchange reserves. Whether the current global disruption turns out to be short-lived or drags on, he said, allowing the rupee to depreciate gradually would allow the economy to adjust with less damage.
On crude oil, Panagariya took a similar market-first position. He argued that if global oil prices rise, the increase should find its way into domestic fuel prices rather than being absorbed by the government.
"The government is not there to guarantee a fixed price of any product," he said.
Panagariya also pushed back on proposals to draw in foreign currency through high-interest deposit schemes for Non-Resident Indians. While such schemes can boost inflows in the short term, he cautioned that they come with high long-term costs for the economy.
The economist expressed support for Prime Minister Narendra Modi's appeal to citizens to cut back on discretionary foreign exchange expenditure such as spending on overseas travel, but drew a clear line at making such curbs mandatory, saying forced restrictions could backfire.
Panagariya's remarks are in line with a position he has held publicly. Earlier this month, he had stated on social media that policymakers should not let the Rs 100-per-dollar threshold drive monetary strategy, reiterating that currency movements guided by market forces are more durable during periods of global volatility.
