The Rupee's Verdict: Exposing India's decade of economic illusion

Over the past decade, the Indian rupee has borne witness to a sustained depreciation from around ₹60 per US dollar in 2014 to nearly 95 per dollar by December 2025.

- By Dr. Shaunak Roy

This trajectory is not a mere technical adjustment in exchange rates; it reflects the cumulative outcome of prolonged structural weaknesses within the Indian economy. While official narratives tend to attribute the rupee's fall to external shocks most notably the 50% tariff imposed by the United States on Indian exports during the Trump administrationdeeper, endogenous failures have left the economy ill-equipped to absorb such pressures. Foreign institutional investors have withdrawn nearly USD 16 billion from Indian markets, merchandise trade deficits touched a record USD 41.7 billion in October 2025, and the Reserve Bank of India (RBI) spent close to USD 30 billion between June and October 2025 to defend the currency. This is not merely a currency crisis; it is fundamentally a crisis of credibility.

The Three-Layered Deception

India's much-celebrated GDP growth rate of 6.5-7% conceals a troubling fiscal architecture. Construction-largely driven by government expenditure- now accounts for 18% of GDP, up from 13% a decade ago. This represents fiscal stimulus repackaged as organic growth through strategic classification.

Manufacturing, despite a decade of "Make in India" rhetoric, contributes only 17% of GDP, far below the 22-25% observed in East Asian economies at comparable stages of development.

Private investment has stagnated as profit expectations have weakened, while current account deficits have widened to record levels-ironically coinciding with the period when growth is claimed to be at its peak. This paradox of rising deficits alongside high growth signals that expansion is not rooted in enhanced productive capacity or export-led momentum, but in consumption financed by imported capital.