Actions that Modi Govt. can take today to arrest the slide of the Rupee

4 urgent steps that Modi must take to arrest the fall of the Rupee

4 urgent steps that Modi must take to arrest the fall of the Rupee
4 urgent steps that Modi must take to arrest the fall of the Rupee

I have been writing for months on some timely actions to be taken by the Modi government (which it, unfortunately, did not do) in order to nip this crisis in the bud. Even as the revealing article by Prof. M D Nalapat came in the Sunday Guardian[1], states about Modi taking direct charge of economic measures to avert crisis, the rupee continues to flounder against the dollar. On Monday, the Rupee started at 71.87 for the Dollar and finished at 72.53 at the end of the trading day. It is as if the market is cocking a snook at the Prime Minister (PM) telling him, do what you want, the shorting effort on the rupee is truly on.

What PM needs to do, to arrest the slide (the 5 steps already announced notwithstanding):

  1. Ban trading on the Currency futures such as USD-INR, USD-EUR etc. for a period of three months till this crisis blows over. Allow a week to people to unwind their positions. Heavens won’t come down if this move is undertaken. After three months, extend the ban if needed. Remember that the United States banned Naked Shorts in 2009 and as far as I know, it is still in place[2].
  2. Some individuals, who should be in custodial interrogation for possession of secret documents in violation of the Official Secrets Act, still roam free and write articles praising the Futures markets and their robustness in India[3]. This individual, Ajay Shah, who is employed in a think tank, financed in part or whole, by the Finance Ministry, has been writing articles saying that nothing needs to be done to arrest the slide of the Indian Rupee[4]. This is pure bunkum and he should know it – India is the fastest growing economy and its exports have been improving, even before the run on the rupee started. The Damocles Index of India is a robust 25 and this is proof that the run on the rupee is carefully orchestrated. He has been named in a CBI First Information Report (FIR)[5] of colluding with companies like OPG Securities and AlphaGrep[6] in their manipulations of the National Stock Exchange (NSE) and continues to be on the board of several blue-chip companies in India. Unlike a politician, he is just a technocrat, being investigated for his role in the NSE Co-location scam. Why has he not been taken in for custodial interrogation? He can provide vital clues.
  3. Reliable sources indicate that while the Govt. has been told that there has been no co-location at NSE/ BSE, there are several brokers still taking advantage of this by either installing high-speed lines to their offices, closely located to the NSE or operating from within the NSE premises itself, in plain sight. This needs to be stopped forthwith.
  4. Since this is now being run from the PMO’s Office, please ensure that there are no leaks. The more you deprive the Jai Chands in your bureaucracy of information, the easier it will be for you to conquer this crisis.


[1] PM Modi takes direct change of economic measures to avert crisisSep 15, 2018, Sunday Guardian

[2] Ban on Naked Short-Selling in the USSpring 2009, McMillan.CA

[3] Stock futures in price discoveryAug 20, 2018, Business Standard

[4] Rupee’s depreciation: Why it makes sense not to sit back and do nothing yetSep 3, 2018, Business Standard

[5] Ajay Shah named in CBI FIR in NSE scam. Should he step down from NIPFP? Jun 3, 2018,

[6] Six questions for Ajay ShahJul 6, 2018,

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  1. Sadly the 56″ has proved to be A Blind Dumb Deaf Mute Half Cunning and Buddhu and all in ONE.
    PC and Co appear to be more Powerful under Modi then under MMS.

  2. The prime minister himself stated that economics was not his subject, and also that Raghuram Rajan was good at it. I doubt he would have taken a direct charge of any economic manoeuvre. Still, you guys seem to have an insider’s view of things, so there might be some element of truth in what Nalapat wrote.

    Secondly, Ajay Shah is certainly an expert in these matters. He may or may not have gamed the system. Regardless, I would tend to place more faith in his judgment that this is not the right time for a strong intervention.

    If there is an article with comprehensive data on India’s dollar debt trajectory, and a quantitative analysis of India’s leverage in currency management, I would be willing to change my view.

  3. And pray how do you think Modi Govt can infuluence the $-EUR market and “ban” it? Its ok to have Out of the Box ideas, just run a sanity check and ensure its not stupid. Unless you have a degree in “Entire Economics”

    • If future market is providing a threat to the economy what is harming in banning it? What is bigger than the country itself? Have you been around when the 2008 financial crisis broke out? See the measures that were taken to stop the slide in the stock markets.
      Once people start thinking country is bigger than economics, things will start showing shape.


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