Depreciating Indian rupee and tax exemption on government securities

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Energy imports
Increase in oil prices 
Rupee Depreciation
Reduced weightage in global indices
Stock market shocks and underperformance

And as per the geopolitical scenario, the future is still uncertain specifically the USA-Israel-Iran conflict 

All of these combined are increasing the import bill of India, creating more depreciating pressure on the Indian rupee, making our imports more expensive and increasing inflation

We are stuck in a feedback loop:

For ex - last year we were paying $60 per barrel of oil, at INR 80 per $ = INR 4800 per barrel pf oil
Presently, we are paying for example $90 per barrel of oil, at INR 95 per $ = INR 8550 per barrel of oil

Rupee depreciates, and Increase in oil prices
Our import bill increases because of rupee depreciation and increase in oil prices
We import again paying more Dollars
Rupee depreciates more 

The balance of payments is getting wider.

The Prime Minister of the country, coming out openly and asking a normal citizen to stop buying gold or to not visit a foreign country, is proof that there is some serious concern

Amidst this crisis, government and other authorities like RBI are utilizing different ways to support rupee from falling further

This, in one sense, is restricting the free market to discover the true price but at the same time it is necessary as well to control the domino effect.

For example RBI is using its traditional methods to defend the rupee, like it has sold an enormous amount of 53 Billion dollars in FY2026, this is like we are using our war chest to defend ourselves 

Recently the government exempted taxation on government bonds for foreign institutional investors,

This will help recall the capital going out of India because of global rotation of money from the stock markets.

Earlier the tax used to be:
Interest income 20%
Long term capital gain 12.5%
Short term capital gain 30%

Now all of this is removed, tax liability is absolute zero retrospectively from 1 April 2026.

For example - To put this in perspective, 
earlier interest on government security is 6%
The post-tax return after 20% tax on interest income is 4.8% only
which is like you are asking a lender, lend us money and we will pay you 6% interest and then paying them only 4.8%.

Now the interest payment is being restored to 6%
This move is expected to bring $35 to $50 billion 
(Credits - Jayant Mundhra)

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But why we're not fixing the fundamentals?

The widening balance of payments can also be corrected by making:

tourist places more foreign tourist friendly (For eg. Goa)
industries more export competitive 
more business-friendly environment, Inviting foreign domestic investments and not only foreign institutional investments

What are your thoughts?

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