There is something uniquely vicarious about tokenism in Indian politics. Earlier this week, Prime Minister Narendra Modi urged Indians to practise austerity. The central concern was to conserve depleting dollars. Ergo, the sermon called on people to not buy gold, curb foreign travel, eschew destination weddings and move towards work from home and virtual learning. To that end, Modi cut down the size of his convoy to two cars.
This triggered a riveting spectacle of photo-ops. The durability of the self-certified austerity of politicians will show up sooner than later. The state actors didn’t come up with much beyond wheel arithmetic and theatrics. Meanwhile, the rupee careened to Rs 96 per US dollar, the stock indices slid further, bond yields went up, and wholesale inflation at 8.3 percent signalled higher retail inflation ahead. Any hope of a solution from Beijing was dashed by a “he said, Xi said” warble of words.
India’s economic crises have almost always been about the gap between the economy’s need for dollars and its ability to earn dollars. The rupee’s troubles predate the war. They reflect the economy’s inability to compete consistently in global markets and deliver returns—foreign institutional investors sold Indian equities worth Rs 1.61 lakh crore in 2025.
Now is the time to think big, think lateral. Governments and goats love weeds. Speculation is rife about cesses and surcharges on everything from travel to remittances. Chasing paise will not help. India must build a forex fortress leveraging its growth opportunities and sovereign assets. To that end, here are a few thoughts.
From Robert Solow to Béla Balassa and Paul Samuelson, the economics is unambiguous: a currency is a claim on a nation’s productive capacity. India has the assets. James Tobin described the ‘Q ratio’ as the relationship between an asset’s market value and its replacement cost. By that metric, India’s public sector and sovereign assets are chronically undervalued.
India needs to consolidate its resources. The value of its listed public enterprises is over Rs 39 lakh crore and that of its banks is over Rs 17 lakh crore. The strategic play is to carve out government shareholding above the statutory 51 percent threshold into a sovereign wealth fund (SWF)—say, the Amrit Kaal Fund—modelled on Singapore’s GIC. The SWF can cherry-pick high-performance counters and package them into dollar-denominated exchange-traded funds for overseas bourses (and GIFT City) and rupees for Indians.
The SWF will enable raising dollar resources. It will also signal that India has matured as a custodian of capital. It strips away the “bureaucratic discount” and replaces it with an “India premium”. The SWF also becomes a kinetic anchor platform for India’s next-generation mega-projects capable of leveraging its assets to raise debt seamlessly—whether in rupees at home or in dollars overseas.
Thomas Edison said the value of an asset is in its utility. The same principle applies to sovereign balance sheets. Yet India’s approach to its vast domestic wealth remains structurally constrained. Yes, it has monetised some assets, but for the better part it has treated its rupee-paid domestic assets—sprawling rail networks, land banks, highways—as entries in the fiscal ledger and not leveraged its potential for dollar realisation.
It is time it recast its approach. The government has listed assets worth Rs 16.72 lakh crore for monetisation. Thus far, it has depended on anchor investors—global and Indian pension funds—to realise the value. The two friction points faced by investors are currency risk (to pensioners the funds must hedge) and ticket size. How about looking at the value potential of bundling these assets?
Instead of listing individual infrastructure investment trusts for roads, power or rail, why not offer a diversified bundle denominated in dollars—thereby reducing currency risk? The world’s 500 top asset managers are now managing over $128 trillion and mega funds look for larger ticket sizes and reduced currency risks. This way, global institutional investors need not play the guessing game about an emerging market currency and focus on funding India’s growth on neutral terms.
Dollar townships are another option. India needs homes for its burgeoning youth population—there are roughly 90 lakh marriages every year. India also needs new townships around the industrial corridors that are sustainable and smart. Urbanisation, which is a force multiplier and an employer at the intersection of rural and urban economies, could also be leveraged to woo patient foreign capital.
Global players though do not want to navigate the friction points of India’s permission raj. To start with, the Union can ask the states to compete for 25 township slots with all the clearances in place. The government could then invite bids in dollars from global players (BentallGreenOak, TPG and Kohlberg Kravis Roberts, Blackstone et al) with or without local partners. The idea is to enhance the value of India’s most illiquid rupee asset into dollar resources, and set new standards in urbanisation.
These are only some of the ideas, but they should suffice to frame the change in approach needed. India does not lack assets; it lacks the strategic audacity to leverage them. By professionalising ownership, recycling infrastructure and incentivising state-level competition, India can convert latent national wealth into a kinetic global advantage.
What the government does to arrest the fall of the rupee and the rise of inflation in the next few weeks would matter. But what matters more is what it does to pave the way for sustainable growth. In the final accounting of history, it is not what was done that defines a crisis. It is what was not.
Read all columns by Shankkar Aiyar
SHANKKAR AIYAR
Author of The Gated Republic, Aadhaar: A Biometric History of India’s 12 Digit Revolution, and Accidental India
(shankkar.aiyar@gmail.com)
