Chief Economic Advisor Nageswaran says he's 'not losing sleep' over weak rupee
MUMBAI: On a day when the rupee hurlted past the sensitive 90-a-dollar-mark, hitting 90.29, Chief Economic Advisor V Anantha Nageswaran said he "is not losing sleep" over the weakening so long as it's not hurting exports and pushing up inflation.
Addressing a CII event on Wednesday, he also expressed confidence that the bleeding rupee will claw back to a position of strength from next year. But Nageswaran neither offered any reason for the optimism nor mentioned a level he believed it will see it settle at.
"It will come back next year. Right now, it's not hurting our exports or inflation. I am not losing my sleep over it. If it has to depreciate now probably is the right time," India's chief official economist said.
On the falling exports and the rising imports and the resultant widening of trade deficit, Nageswaran said, "Being a developing economy, our imports will only grow. Therefore, they need to be financed through exports and through investments. We need to crank up our efforts to get more FDI."
Gross FDI flows may cross $100 billion in FY26, Nageswaran added, though the latest RBI data show that gross FDI inflows in H1 FY26 increased 16.1% year-on-year to $50.36 billion.
However, net FDI, which is inflows minus outflows, stood at a lowly $7.64 billion during the first half of the current fiscal.
The reason for lower net FDI inflow, according to Nageswaran, is that developed economies in the past three years saw an "abrupt increase" in interest rates, which impacted FDI inflows to India.
Also, outbound investments from domestic companies have gone up to the developed economies, reducing to lower net FDI inflows, said Nageswaran.
He added that "starting 2023-24, the nature of terrain has shifted in respect of net FDI inflows. We need to up our game."
