New Delhi, Dec. 15 -- India presents a macroeconomic paradox today. GDP growth is among the fastest in the world, inflation is nearly zero and the fiscal deficit is in check. Yet the Indian rupee is Asia's worst-performing currency. Foreign portfolio investors have pulled out $17 billion and net foreign direct investment (FDI) all but evaporated in 2024-25.

What explains this disconnect?

A careful examination reveals an uncomfortable truth: strong domestic fundamentals alone no longer guarantee external confidence.

Recall that India is possibly the only large developing Asian economy that has run a consistent trade deficit for decades. Unlike China, Japan, Korea or most Asean peers, India imports more than it exports, particularly ener...