Immersed in its political agenda, the Narendra Modi government has turned a blind eye to the predicament of the Indian rupee, which is continuously falling against the US dollar. Though the Prime Minister and his finance minister, Nirmala Sitharaman, keep harping on India’s rapid economic growth, they seem oblivious to the decline in the value of the rupee. When Mr Modi came to power in New Delhi in 2014, the dollar was priced at Rs 54.78. Today, the rupee has tumbled by more than 66 per cent to Rs 89.13 to a dollar – a lifetime low.

US tariffs on China, Mexico and Canada have strengthened the greenback, while US tariffs on India have further weakened the Indian currency. In fact, foreign exchange experts say 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 government’s economic management. In fact, a growing number of economists both at home and abroad are beginning to doubt the veracity of the government’s economic narrative.

Unfortunately, the Modi government is laying more stress on its political agenda rather than on ways and means to improve the economic environment in the country. The declining value of the rupee has ballooned import costs, pushed up the inflationary price spiral at home and prompted global investors to pull out funds from Indian equity markets, leading to a higher dollar demand which will further weaken the Indian rupee. At the same time, the weakening of the rupee has widened the current account deficit (CAD).

Though the falling rupee should make Indian exports cheaper and highly attractive for rich countries like the US, President Trump’s high import tariffs have nullified that advantage. What is more, India imports almost 80 per cent of its crude oil requirements, but US President has forced the Indian Prime Minister to reduce purchases of cheaper oil from Russia and buy costlier oil from the US.

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 innovative and effective policies for non-resident Indians to park their dollars in India.

Ergo, it seems almost inevitable 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 slide to a historic and disastrous low level of Rs 100 to a greenback!