CEA Nageswaran isn't 'losing sleep' over depreciating rupee, says it's 'not hurting' exports, inflation

CEA V Anantha Nageswaran

Chief economic advisor V Anantha Nageswaran expressed confidence even as Indian rupee breached Rs 90-mark on December 3 amid persistent equity outflows. Nageswaran said he is not “losing sleep” over the weakening of the domestic currency as long as it is not hurting exports.

“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,” the top economist said the CII IndiaEdge Summit on December 3.

Nageswaran also said India is a developing economy and its imports will “only grow”. “Therefore, they need to be financed through exports and through investments. We need to crank up our efforts to get FDI,” he said.

However, gross FDI flows may cross $100 billion in FY26, Nageswaran added. According to RBI data, gross FDI inflows in H1 FY26 increased 16.1 percent on year to $50.36 billion.

Net FDI in India—inflows minus outflows—stood at $7.64 billion during the first half of the current fiscal. The reason for lower net FDI inflow, as per the chief economic adviser is that developed economies in the last three years saw an "abrupt increase" in interest rates, which is impacted FDI inflows to India.

Also, outbound investments from Indian entities has gone up to the developed economies, reducing to lower net FDI inflow in India, said Nageswaran. "Starting 2023-24, the nature of terrain has shifted in respect of net FDI inflows. We need to up our game."

At the same event, Nidhi Kesarwani, Joint Secretary at DPIIT, said that the central government is reviewing its FDI policies. "In the past we have seen, many sectors have been opened up. In the coming days, you'll see many changes in the FDI policies across sectors," said Kesarwani.

On the National Manufacturing Mission, the official said that it is very futuristic. "The NMM is the missing which will take up manufacturing further." The government intends to take manufacturing sector’s share in GDP to 25 percent by 2030, from about 17 percent currently.