External shocks, not domestic weaknesses, behind current economic challenges: Rangarajan

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Speaking at the 18th annual doctoral thesis conference here, he said that in spite of a falling rupee, India’s fundamentals remain strong, and the end of the war would revive the value of the rupee. The recent currency pressures have been influenced largely by capital outflows, rather than by structural weaknesses in the economy, he observed.

To mitigate the impact of external shocks, Mr. Rangarajan proposed a three-pronged approach: strengthening diplomatic engagement and diversifying supply sources in the short term, building strategic reserves in critical sectors such as energy in the medium term, and pursuing efficient, selective import substitution in strategically important industries over the long term.