The Tribune Newsroom: Former Deputy Chairman of the Planning Commission says people shouldn’t worry if the rupee crosses 100 to the dollar
25 June, 2026 – Chandigarh : Montek Singh Ahluwalia was former Deputy Chairman of the Planning Commission (now Niti Aayog) during Manmohan Singh’s tenure. He has been Finance Secretary, Commerce Secretary, Secretary to the Department of Economic Affairs and Special Secretary to the PM. During the 1991 reforms, then Finance Minister Manmohan Singh and Ahluwalia played a key role in the transformation of the economy helmed by then PM PV Narasimha Rao. In Punjab, in 2020, he led a group of experts set up by then CM Capt Amarinder Singh to revitalise the state economy.
In The Tribune Newsroom, anchored by Editor-in-Chief Jyoti Malhotra, Ahluwalia talks about the challenges facing India on the economic front and the way forward. Excerpts:
Jyoti Malhotra: What is the state of the Indian economy today?
Montek Singh Ahluwalia: The short-term concern was the West Asia crisis. Fuel prices could have touched Rs 120-130. Oil prices may not go down immediately, as supply possibilities have been damaged and there have been dippings into strategic reserves. However, the capital account surplus has more or less depleted in the past two years.
JM: Why is that?
MSA: There are multiple explanations. Some say a lot of the investors who came in made a lot of money and exited. You want to create an impression that India is a safe place to come in and take your money out when you must.
JM: Is $20 billion leaving the country in the first quarter of this year a problem?
MSA: It isn’t. The Finance Minister is making positive noises about bringing in capital. The RBI and Finance Ministry allow you to bring in short-term flows, but you shouldn’t be managing your balance of payments or short-term flows to prevent a further sharp depreciation in the rupee.
We’ve set a good target — Viksit Bharat by 2047. One view is that we’re doing fine because we’re the fastest-growing emerging market. But if you want to achieve that target, you need real growth of over 8 per cent.
JM: Growth is about 6 per cent today…
MSA: Yes, and there’ll be problems if the world economy doesn’t recover. Is 8 per cent the short-term target for the next five-seven years? If you achieve over 8 per cent for the next 20 years, we will move to the bottom high-income countries. We will have to plan for a slowdown during this period, just as China did. So if you want to average 8 per cent, you need to target 9 per cent.
JM: The rupee crossed 100 to the dollar a few days ago, it’s back now at 95. While retail inflation is down, wholesale inflation has crossed 9 per cent. The trade deficit has gone up to $120 billion compared to $95 billion last year, and the rupee has just been described as Asia’s worst-performing currency in 2025. Should the RBI protect the rupee?
MSA: They should have allowed more relevant market forces and longer-term strategy to work, but for the past five years our export performance has been poor. The depreciation will hurt importers, those planning holidays abroad and those paying for foreign education.
But if we have a balance of payments problem, allowing the rupee to depreciate is not a bad idea. The RBI Governor has said it’s now a bit over-depreciated. That’s the right thing to manage the situation because that’s how the market begins to judge. If we had not allowed depreciation, we would not be in good shape. People should not worry if it crosses Rs 100 to the dollar.
JM: Economist Surjit Bhalla has accused the ‘deep state’ in the Centre of preventing a second economic reform. And Mohandas Pai, former board member of Infosys, talks of tax terrorism. Do you agree?
MSA: I don’t agree with Surjit’s use of the ‘deep state’. He thinks there’s such an entrenched bureaucracy that even the political leadership doesn’t know how bad things are. In the drive to indigenise production two years ago, it was said the import of laptops will be stopped. I think Pai brought this to the notice of the government that it was a crazy step. The decision was reversed. Hundreds of such decisions are being taken, all in the name of government.
JM: The government doesn’t know what the bureaucracy is doing?
MSA: Yes, let me go back to 1991. Things were easier because we were not trying to create a new system, we were getting rid of idiotic rules. Manmohan Singh persuaded then PM Rao, who took the risk. Some years ago, the government appointed a high-level committee under Rajiv Gauba, former Cabinet Secretary, who got together a bunch of businessmen and experts to review Quality Control Orders. About a hundred orders were removed, but not the remaining 600.
Naresh Kaushal, Editor, Dainik Tribune: How do you assess India’s progress towards a developed economy by 2047.
MSA: It’s going to take a lot of work. The PM is for ‘reform, perform and transform’. We should be able to list what we are doing in critical areas. People mistake form for substance. A businessman goes to 20 people. A single-window system is good, but if you put in an application and it is treated by several windows, nothing is gained, except that you don’t go to 20 offices.
Sanjeev Singh Bariana: India has been able to manage the oil crisis with four hikes. In the short run, will there be an impact on consumers?
MSA: There will be. We will have to see whether it will be through prices or the government will reduce expenditures to control the fiscal deficit. In that case, there will be no further impact on prices.
The PM has asked people to tighten their belts — don’t go abroad, don’t buy gold. How are belts tightened? One way is to say prices have gone up, companies are suffering losses, so we are raising prices. Or the government could say, let us not raise prices too much, we won’t raise oil prices. The government will either reduce excise or the companies will take a hit.
I don’t agree the political leadership doesn’t know how entrenched the bureaucracy is…. In the drive to indigenise production two years ago, it was said the import of laptops will be stopped. The decision was reversed subsequently.
Nitin Jain: In 1991, when you steered the economic reforms, you would engage with the Opposition. Is that conversation missing today?
MSA: It depends on the state of politics and personalities. Manmohan Singh would reach out to the Opposition. I sometimes thought the Congress was unduly protective of the public sector.
The Vajpayee government did some privatisation, but it did not fully work. We need to expand government presence in certain areas, but why should it run a hotel?
Mohit Khanna: What are your views on the repealed farm laws?
MSA: In 2020, then CM Amarinder Singh asked me to head a committee. Punjab was once second or third in terms of agriculture but had slipped to 14 or 15. We prepared a report. You have to protect the interests of farmers, but the insistence on keeping private marketing out is wrong. Agriculture is not the backbone of Punjab’s economy anymore. The repealed laws were good, but they were rushed through. Fertilisers, for example, are being given practically free, at 8 per cent of the cost. We must decide who deserves a subsidy.
Rajmeet Singh: During Capt Amarinder’s time, you advocated ending free power to medium and large farmers.
MSA: It’s draining the economy. Punjab has infected the rest of the country. Other states have replicated it.
Bhartesh Thakur: What about inequality in the country? As per the World Inequality Report, the top 1 per cent hold 40 per cent of the wealth. The 1991 reforms unleashed the ‘animal spirits’.
MSA: You must free the ‘animal spirits’ subject to guardrails. Today, for example, there are very high duties on steel, aluminium and plastics used by the small-scale sector. If you lower the duties, cronyism will disappear.
Bhartesh Thakur: Is crony capitalism not wrong?
MSA: There’s nothing wrong with capitalism. Crony capitalism is when political power is used to get unfair benefits. When you have the private sector in a regulatory environment, appropriate control will prevent cronyism.
Regarding inequality, if you’re stuck in a low-level equilibrium and the economy is growing at 4 per cent, there is not much inequality. If the economy grows at 6 per cent, the poor at 5 per cent, and the rich at 7 per cent, the poor are still doing better than before.
GS Paul: What is your advice to parties on freebies?
MSA: Electorate economics doesn’t explain it because the usual economic position is that there’s a budget constraint. ‘Mahila’ is an important factor in the Modi school of politics. The South is making bus rides free for women, but if you don’t provide extra money, the service will deteriorate and people will move away from public transport.
GS Paul : Punjab’s debt is increasing. What can the Centre do to help?
MSA: Punjab has relied on Centre’s support since it’s a border state. It is second last in terms of its debt to GSDP. The Centre can’t bail out every state. If you give money to Punjab, other states will demand it too.
Shivani Bhakoo: What are the three biggest challenges in the way of a Rs 5-trillion economy?
MSA: The ease of doing business is one. If you’re a small businessman and have to deal with 20 people, you can’t think about your company. Secondly, the government must not win elections through freebies. The third is trade. Even rich countries are not talking about being as open as they were. We need to work with trusted partners. I’m in favour of what has been done so far. FTAs with the UK, the EU, etc. We have concerns about China, but there is the CPTPP, with ASEAN members, North Korea, the EU, the UK and Australia. We should join it. It doesn’t have China.
Aditi Tandon: Are freebies sustainable?
MSA: No, freebies lead to something else being squeezed out. At the state level, it could mean delayed salaries or filling vacancies through contracts. States can’t borrow without the Centre’s approval. If it maintains discipline, states will come to heel.
The Tribune