"So What?": Economic Adviser Shamika Ravi Shrugs Off Rupee-At-100 Panic

As concerns grow over the possibility of the Indian rupee weakening to 100 against the US dollar, Shamika Ravi, a member of the Economic Advisory Council to the Prime Minister, downplayed the panic, saying in an ANI podcast interview: "So what? 100 is just a number."

Ravi argued that the focus should not be on defending a particular exchange rate but on managing the broader economic consequences of a global supply shock.

"At the end of the day, what you do not want is to jump into this, try to keep the value at a certain level, which leads to inflationary pressures, which is going to have all kinds of other chaotic impacts," she said.

She added that "you do not want to intervene in a market which is working fine right now," linking that view to the government's emphasis on austerity and curbing wasteful consumption.

"Which is why the austerity measures and the other kind of exhortations from the prime minister and now increasingly from different arms of the government, what we do not want is wasteful consumption," Ravi said.

She acknowledged that prices would rise as part of the adjustment process, arguing that demand management is one of the few available responses to a supply-driven shock.

"Our prices will rise because that is the best way to affect demand because this is a supply shock. You're not going to be able to do very much," Ravi said, noting that India was already drawing down its foreign exchange reserves.

Asked how long India could continue using its reserves, Ravi replied: "As long as it is required."

She added that new international agreements would help replenish reserves over time. Referring to India's agreement with the UAE, Ravi said it was "a very major agreement" that would ensure long-term energy security while supporting external stability.

Ravi's comments echo arguments made by economist Sanju Verma in a recent Moneycontrol column. Verma wrote that even if the rupee touches 100 against the dollar, "that is no reason to panic," arguing that exchange-rate levels should be viewed in the context of India's broader economic fundamentals.

According to Verma, India's fiscal deficit of 4.4%, current account deficit below 1% and retail inflation below 4% reflect a strong macroeconomic position. She argued that gradual rupee depreciation can boost exports, support manufacturing, IT, pharmaceuticals and agriculture, encourage tourism and strengthen domestic production, while India's foreign exchange reserves continue to act as a shock absorber against global volatility.

"India's growth story remains intact," Verma wrote.