At a time when the rupee has underperformed by a considerable margin in 2025, India’s Economic Survey, ahead of Budget 2026, has argued that the rupee has become merely a victim of the geopolitical uncertainty that has gripped almost all of global markets lately.
The survey added that the rupee’s value does not reflect India’s fundamental health, noting that the country is in good shape, with banks being healthy, credit growth is respectable and corporate balance sheets are strong.
“Growth is good; the outlook remains favourable; inflation is contained; rainfall and agricultural prospects are supportive; external liabilities are low; banks are healthy; liquidity conditions are comfortable; credit growth is respectable; corporate balance sheets are strong; and the overall flow offunds to the commercial sector is robust,” the report said.
“Policy dynamism and purposeful governance reinforce this backdrop. The rupee’s valuation does not accurately reflect India’s stellar economic fundamentals,” the report added.
This comes at a time when the rupee has emerged as one of the weakest currencies in Asia, even breaching past the 92 mark against the US Dollar.
Keeping that in mind, the Economic Survey admitted that the rupee has indeed underperformed and that India runs a trade deficit in goods, with the net trade surplus not being enough to maintain a healthy balance of payments.
“The Indian rupee underperformed in 2025. India runs a trade deficit in goods. Its net trade surplus in services and remittances is not enough to offset it. India depends on foreign capital flows to maintain a healthy balance of payments. When they run drier, rupee stability becomes a casualty,” the report said.
Finally, the report added that having a weaker rupee doesn’t necessarily hurt right now, as it offsets some impact of the American tariffs due to the lower cost of currency.
Of course, it does not hurt to have an undervalued rupee in these times, as it offsets to some extent the impact of higher American tariffs on Indian goods, and there is no threat of higher inflation from higher-priced crude oil imports now. However, it does cause investors to pause. Investor reluctance to commit to India warrants examination,” the report said.
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