It is true that our exports have floundered and dollar earnings are low. But we do have sizeable foreign exchange reserves to tide over short-term volatility Is India’s policy mix on foreign exchange adequacy “bipolar", as former Reserve Bank of India governor Urjit Patel has suggested in an opinion piece?
Easing inflows of “hot money" from abroad into Indian assets, or taking on a bigger burden of foreign loans, while also raising import tariffs that would blunt our export edge and thus the ability to earn dollars do not square up, in his view.
Together, they could expose our economy to instability if money were to flee our shores, the rupee dropped and dollar debts got hard to repay.