New Delhi, Feb. 10 -- Let's take stock of India's external environment. Our pile of foreign exchange has dropped by nearly $80 billion or about 12% in five months. Much of this loss was because the Reserve Bank of India was trying to defend a falling rupee. The rupee-dollar rate is racing towards 88 and beyond, down by 6% in about six months. This steep fall is spooking foreign portfolio investors in stock and bond markets; they pulled out $11 billion in the last quarter of 2024. our stock of dollars is now lower than our total outstanding foreign debt.

On the trade front, our merchandise trade deficit threatens to breach $200 billion by the end of this fiscal year. Interest obligations on foreign debt are close to $25 billion. On the ca...