Even as Prime Minister Narendra Modi and his Finance Minister, Ms Nirmala Sitharaman, keep harping on India’s ‘rapid’ economic growth, the value of the rupee has been on a continuous decline since the NDA government came to power in 2014. Last week, the rupee tumbled to a lifetime low of Rs 85 to a US dollar for the first time in 77 years since Independence. When Jawaharlal Nehru became the first Prime Minister, the value of one rupee was equal to that of one dollar. Decades later, when Mr Modi became Prime Minister for the first time in 2014, the dollar was priced at Rs 54.78. During Mr Modi’s tenure so far, the value of the rupee has nosedived by 57 per cent.

But this is not the end of the Indian currency’s woes. After Donald Trump takes over as US President on January 20, 2025, it is feared that his ‘America First’ policy will hasten the decline in the value of the rupee. In fact, some foreign exchange experts feel that in such a scenario one should not be surprised if the rupee crashes to the abysmal level of Rs 100 to a greenback.

The sustained downward drift in the value of the rupee clearly indicates that all is not well with the Indian economy, contrary to the claims of the Modi government. In fact, a growing number of economists, both at home and abroad, are beginning to doubt the veracity of the economic narrative and number touted by the government.

Unfortunately, the government is laying more stress on its political agenda than on ways to improve the economic situation. The current inflationary price spiral has made the lives of the poor as well as the low- and middle-income classes miserable, while simultaneously putting the brakes on India’s economic growth.

Admittedly, there are other factors which are contributing to the downward drift of the rupee, including external factors which are beyond the control of the Indian government. These include geopolitical tensions like the Russia-Ukraine war, the Iran-Israel conflict and the Hamas-Israel war, the rising trend in crude oil prices, and the US Fed’s interest rate policy. Clearly, regardless of which government is in power, New Delhi cannot take any mitigating measures to shore up the rupee.

However, there are domestic economic measures which are available to the government to save the rupee from a further decline. For instance, the persistent trade deficit, where imports outweigh exports, plays a significant role in depreciating the rupee’s value. But even as the balance of payments situation is worsening, the Modi government’s focus remains on domestic politicking. Ironically, even as the government makes much ado over its ‘Make in India’ and ‘Atma Nirbhar’ policies, our imports from China have shot up to new highs, making our giant neighbour our number one trade partner globally.

Another crucial factor that has a bearing on the rupee’s depreciation is the current account deficit, which reflects the country’s overall financial health in relation to the rest of the world. Briefly put, India is spending more abroad than it earns. Among the ‘culprits’ is the unrestricted foreign jaunts by politicos and government officials, while businessmen have left the country in droves after siphoning off billions of rupees from Indian banks. As a result of this ongoing and large outflow of Indian funds, the country’s foreign exchange reserves have got depleted. The government should take comprehensive measures to replenish the foreign exchange kitty by boosting export earnings and devising attractive policies for non-resident Indians to park their dollars in India.

Domestically too, the inflationary price spiral has eroded the rupee’s purchasing power. The speed with which prices of essential commodities and non-essential goods are shooting up has made the life of the aam aadmi miserable. But the government has yet to take concerted measures to contain the rising prices. In contrast, a couple of years ago, US inflation rates were higher than in India, but concerted and imaginative steps by the US government and the US Fed have brought inflation down to below the levels in India.

It seems almost predictable that if the Modi government continues to ignore economic issues and, simultaneously, President Trump resorts to a hyper-protective trade policy, the value of the Indian rupee may well slide to a historic and disastrous low level of Rs 100 to a greenback!