India's macro fundamentals remain strong despite rupee volatility; economy resilient amid global uncertainties: Finance Ministry
ADVERTISEMENT
The Centre on Tuesday said India's macroeconomic fundamentals remain strong despite the recent depreciation of the rupee against the US dollar, asserting that the economy has consistently recorded real GDP growth of over 7% during the past three years and continues to show resilience amid global uncertainties.
In a written reply to a question in the Rajya Sabha, Minister of State for Finance Pankaj Chaudhary said the exchange rate of the Indian rupee is influenced by a combination of domestic and global factors, including movements in the Dollar Index, capital flows, interest rates, crude oil prices and the current account deficit.
“At present, the macroeconomic fundamentals of the Indian economy remain strong. Real GDP has consistently grown at over 7% during the last three years,” the minister said.
He added that economic growth continues to be supported by robust domestic demand, healthy corporate balance sheets and prudent fiscal management. High-frequency indicators for the first quarter of 2026-27 also point to sustained momentum in economic activity and domestic demand, reflecting the resilience of the economy.
The government clarified that the rupee follows a market-determined exchange rate regime and that neither the Centre nor the Reserve Bank of India (RBI) targets any specific exchange rate or trading band.
According to the ministry, the RBI closely monitors the foreign exchange market and intervenes only to curb excessive volatility. It also keeps track of major global developments, including monetary policy actions by leading central banks, key economic data releases, OPEC+ decisions and geopolitical events that may affect the dollar-rupee exchange rate.
To support foreign exchange inflows and reduce depreciation pressure on the rupee, the RBI has undertaken several measures. These include liberalising the External Commercial Borrowings (ECB) framework, expanding the Fully Accessible Route (FAR) for foreign investors, raising investment limits for non-resident Indians and overseas investors, introducing swap facilities for FCNR(B) deposits and overseas borrowings, restoring the export realisation period to nine months, and signing local currency arrangement agreements with countries such as the UAE, Indonesia, Maldives and Mauritius.
The ministry also said India's external debt remains sustainable and prudently managed. As of end-March 2026, external debt stood at $762.8 billion compared with $736.4 billion a year earlier, while the debt service ratio improved to 5.8 from 6.6.
Foreign exchange reserves stood at $671.6 billion as of June 12, 2026, providing an import cover of 10.3 months and covering 88% of the country's outstanding external debt.