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Jan 30, 2026
Viren S Doshi

Indian Growth Story versus The Story of Indian Rupee: Why Isn't the INR Appreciating?

Overview India's economy continues to deliver robust performance, with real GDP growth projected at 7.4% for FY 2025-26, strong domestic consumption, manufacturing gains, and resilient services exports positioning it as a global standout amid slower worldwide growth. Fundamentals remain solid, with low inflation (recently 0.7-1.3%), foreign exchange reserves above $680 billion, and a narrowing current account deficit. Despite this, the Indian Rupee (INR) has faced ongoing depreciation, recently hitting a record low near or beyond 92 against the US Dollar in late January 2026, making it one of Asia's weaker currencies amid persistent pressures. The Economic Survey 2025-26 notes that the rupee is undervalued relative to India's stellar fundamentals, "punching below its weight" and underperforming in 2025, yet this undervaluation provides a cushion by boosting export competitiveness and offsetting external shocks like US tariffs. The apparent paradox—strong growth without currency appreciation—arises from structural, external, and policy factors. Persistent Current Account Pressures India's merchandise trade deficit, driven by energy and capital imports, outweighs services and remittance surpluses, requiring capital inflows to balance. Growth accelerates import demand, limiting appreciation potential. Volatile Capital Flows FPI outflows (often billions in short periods) amid global uncertainty exert downward pressure, overshadowing domestic positives. Global and Geopolitical Factors US tariffs, dollar strength, and risk-off sentiment dominate emerging market currencies, including the INR. RBI's Exchange Rate Management The RBI's managed float curbs volatility through interventions, accumulating reserves during inflows and selling during outflows to support exports and stability. Other Contributing Factors India's domestic-consumption-led model reduces export reliance, and recent low inflation removes a traditional depreciation driver. Currency Market Dynamics: A Realm Unto Itself The foreign exchange market functions as a largely independent global arena, where currency values are shaped more by international speculation, sentiment, and actual flows than by isolated domestic economic strength—especially for a large, self-reliant economy like India. The global forex market is enormous, with average daily turnover reaching $9.6 trillion in April 2025, up 28% from $7.5 trillion in 2022, according to the BIS Triennial Central Bank Survey. This liquidity is dominated by short-term trading (spot, forwards, swaps, options), inter-dealer activity (46%), and non-bank financial institutions (50% of turnover), with algorithmic and speculative positions often driving movements far beyond fundamentals. In the short to medium term, INR pricing reflects global supply-demand for the currency: interest rate differentials, carry trades, risk appetite, geopolitical events, and speculative bets (including occasional "attacks" that prompt RBI intervention). Economic fundamentals like GDP growth influence long-term trends, but market sentiment and external shocks frequently cause divergence. India's economy—vast, diverse, and increasingly a "world in itself" with massive domestic consumption, self-sufficiency in key sectors, and lower trade openness relative to export-heavy peers—experiences this disconnect acutely. Strong internal growth sustains the economy even as the rupee faces global headwinds, and the undervalued currency (as per the Economic Survey) aids competitiveness without hindering overall progress. On manipulations: India is not designated a currency manipulator by the US Treasury (June 2025 report), nor is it on the monitoring list, as it does not meet criteria like large trade surpluses or one-sided intervention. RBI actions are transparent, volatility management, not unfair manipulation. While forex markets have seen past scandals (e.g., bank rigging), current regulations curb such practices. Thus, the INR's global market position operates "almost on its own" in many respects—driven by interconnected worldwide forces—allowing India's economic story to advance robustly even amid currency weakness. Outlook With solid fundamentals, contained inflation, and potential for renewed inflows or trade improvements, India's growth trajectory remains strong. The rupee's managed, gradual path reflects deliberate policy and global realities rather than domestic shortcomings. Currency strength depends on far more than GDP figures—it mirrors trade balances, cross-country capital movements, speculative dynamics, and strategic choices in an interconnected, often unpredictable world. So-called “weak” rupee is a boon for Indian exporters and Indian exports. “Strengthened exports” does help the advancement of the Indian Growth Story. A weak rupee does contribute to a strong economy, at least as of now, as the Indian economy aims to increase its exports.

Jan 26, 2026
Nakshatra Jagannath & Prof. Ramamurthy Rallabandi

Philip Gunawardena: The Sri Lankan Freedom Fighter Who Loved India as His Own

India’s freedom struggle was never confined to its borders. It was a subcontinental uprising of ideas, sacrifices, and solidarities that crossed oceans and empires. Among the lesser-known yet deeply significant figures of this shared struggle stands Philip Gunawardena, a Sri Lankan revolutionary, statesman, and ideologue whose life was intertwined with India’s march towards independence. Revered today as the Father of Socialism in Sri Lanka and honoured as a National Hero, Gunawardena’s story also belongs to India. A freedom struggle leader In the early 1920s, long before independence became inevitable, Philip Gunawardena was already thinking beyond national boundaries. While studying in the United States, he enrolled at the University of Wisconsin–Madison, where destiny placed him alongside Jayaprakash Narayan, one of India’s most iconic socialist leaders. The campus became a crucible for anti-imperialist thought. Together, these young men debated, organised, and imagined a world free from colonial domination, not just for India or Ceylon (Sri Lanka), but for all oppressed nations. Gunawardena emerged from this period as a committed internationalist, convinced that the freedom of South Asia was indivisible. From London to Europe: Fighting Empire Everywhere By 1928, Gunawardena moved to Europe, beginning in England, where he worked closely with V. K. Krishna Menon through the Indian League. At a time when London was the nerve centre of the British Empire, these activists challenged imperialism from within its own capital. His revolutionary journey did not stop there. Gunawardena participated in frontline movements across Mexico, Spain, and France, absorbing ideas of socialism, labour rights, and anti-fascist resistance. This global exposure sharpened his politics, which he later carried back to South Asia. Return to Ceylon and the Sooriyamal Movement In 1932, Philip Gunawardena returned home to Sri Lanka, bringing with him a radical vision of social justice and political freedom. He became a founding leader of the Sooriyamal Movement, a nationalist campaign that challenged British colonial symbols and asserted indigenous identity. By 1936, he was elected to the National State Council, the then Parliament quickly emerging as one of the most formidable voices against colonial rule. Prison, Escape, and India When World War II broke out, Gunawardena’s party, the Lanka Samasamaj Party (LSSP) took a bold stand. Unlike many colonial elites who supported Britain’s war effort, the LSSP demanded that Britain "Quit Ceylon," mirroring India’s own rising resistance. Philip was the first Sri Lankan to demand that the British ‘quit Ceylon’ in Parliament. For this defiance, State Councillor Gunawardena was arrested and imprisoned. History, however, had other plans. On 5 April 1942, during the Japanese air raid on Colombo, chaos created an opportunity. Gunawardena, along with other LSSP leaders, escaped from prison. Disguised as Guruswami, he fled to India with his wife Kusum, choosing once again to stand with India in its darkest hour. In British India, the couple joined underground networks supporting the freedom struggle across the subcontinent. In 1943, the British caught them and imprisoned them in Bombay with a newborn child. Philip Gunawardena, his wife Kusum, and their newborn child were arrested and imprisoned at Arthur Road Jail in Bombay. It was an extraordinary act of sacrifice, foreign revolutionaries jailed on Indian soil, not for personal gain, but for India’s freedom. After a year in prison, they were deported to Sri Lanka, remaining under restrictions until the end of the Second World War in 1945. Nehru’s Personal Gratitude Some acts of solidarity are never forgotten. After India achieved independence, Jawaharlal Nehru, India’s first Prime Minister, visited the Gunawardena family home in Sri Lanka not as a formal gesture, but to personally thank Philip and Kusum for their courage, sacrifice, and unwavering support to India’s freedom movement. It was a moment that symbolised the moral unity of South Asia’s anti-colonial struggle. A Statesman of Independent Sri Lanka Following Sri Lanka’s independence in 1948, Philip Gunawardena transitioned from revolutionary to nation-builder. Both he and Kusum were elected to Parliament from the Avissawella electorate, a rare political partnership forged in struggle. He became a founding leader and Cabinet Minister of the Mahajan Eksath Peramuna (MEP) government in 1956, often referred to as the People’s Revolution Government, and later served again in the National Government of 1965. Until 1972, Gunawardena remained an active force in public life: fearless, ideological, and deeply committed to social justice. Why India Must Remember Shri Philip Gunawardena In India, we often remember our freedom struggle as a national epic. But figures like Philip Gunawardena remind us that it was also a civilisational and subcontinental movement, powered by shared values and mutual sacrifices. He fought for India without being Indian. He went to jail for India without being counted in its roll. And he was thanked by Nehru not as a foreigner, but as a colleague in the freedom struggle. In remembering Philip Gunawardena, India remembers a chapter of its own freedom, one written beyond borders, in courage and conviction. Images provided by the authors

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Indian Growth Story versus The Story of Indian Rupee: Why Isn't the INR Appreciating?

Philip Gunawardena: The Sri Lankan Freedom Fighter Who Loved India as His Own

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