Even as the rupee remains under pressure, India’s external flows are holding up better than headline moves suggest, according to Economic Affairs Secretary Anuradha Thakur, who flagged strong FDI inflows even as foreign portfolio investors (FPIs) pull out in the near term.
“Gross FDI flows are pretty strong; FIIs are pulling out in the short term,” Thakur said, underscoring that global uncertainty is driving portfolio volatility rather than domestic weakness.
She added that the extent of intervention to arrest currency depreciation “is always a matter of debate,” noting that authorities closely monitor the rupee. “We have been watching the rupee — the moment it crosses 90, we do that,” she said, without detailing the exact measures.
Thakur also pointed to the upsides of a weaker rupee, arguing that “export competitiveness is enhanced,” while stressing that the government is ensuring it is “not overly dependent on imports for our requirements.”
On public finances, she said net borrowing remains in the same range as earlier, with active management of repayments through switches and buybacks closer to timelines.
Any changes to fiscal numbers, she cautioned, would depend on data revisions. “Numbers could change after base year revisions by MoSPI… I don’t see a very big change, but it’s premature to judge. We would factor in the new numbers after the base year revision,” she said. Thakur also noted that the government’s acceptance of the 41% tax devolution formula continues to work well.
Her remarks came on the sidelines of a post-Budget discussion with CNBC-TV18, where Department of Financial Services Secretary M Nagaraju also outlined the government’s financial sector priorities.
Needed: Credit inclusion
Nagaraju flagged a major inclusion gap, saying India still has 300–350 million people in the ‘credit-not-included’ population, while bank credit to the non-financial sector stands at just 56%. “We require credit; we need to be open-minded and look at structures and regulations,” he said, adding that the government has begun preparing a roadmap for banks aligned with the Viksit Bharat goal.
He said credit growth needs to accelerate beyond the current 12% to over 15%, with calibrated measures already underway to deepen the bond market, including partial credit guarantees for bonds. While digital banking licences are not on the table yet, Nagaraju said a panel would need to make recommendations.
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Highlighting sectoral priorities, he said urban challenges will remain a focus area for the next few years, while NBFCs, which grew 10% this year, are expected to do more. On banking reforms, Nagaraju confirmed that the government is examining a proposal to raise the FDI cap in PSBs to 49%, and said public sector banks are expected to raise ₹40,000–45,000 crore of capital in FY27.
Together, the remarks paint a picture of short-term volatility amid steady underlying flows, with policymakers balancing currency management, credit expansion, and long-term structural reforms.
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(Edited by : Shoma Bhattacharjee)
First Published: Feb 1, 2026 7:33 PM IST
