In an exclusive interview with ANI, Bhalla said India’s low current account deficit and low inflation should have supported the rupee.
“The fundamentals of the rupee were in favour of the rupee, not for depreciation,” he said, adding that the key issue is the lack of investment despite strong economic growth.
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Bhalla said policy uncertainties continue to discourage investors and affect the rupee’s performance. “The fundamentals are in favour of a stronger rupee,” he said.
Calling for immediate reforms, Bhalla urged the government to permanently rule out retrospective taxation. Describing the practice as wrong morally, wrong in principle, he said such measures hurt investor confidence and private investment.
He also advocated reducing taxes on foreign investors, particularly capital gains tax. According to Bhalla, India has higher tax rates on foreign investors than many competing economies, making the country less attractive for global capital.”We have super high tax rates on foreign investors….make it competitive. You want to attract them. We need them,” he said.
Referring to efforts to position GIFT City as an international financial hub, Bhalla said the initiative has not achieved the desired results because taxation on capital gains remains high.
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On agriculture, Bhalla called for greater trade openness and implementation of farm sector reforms proposed by the government earlier. He argued that agricultural reforms are necessary to improve efficiency and boost long-term growth.
Bhalla also said vested interests, rather than small farmers, often stand in the way of trade reforms in agriculture.
Highlighting India’s growth prospects, Bhalla said the economy should be expanding at a faster pace than its current growth rate of around 6 per cent.
“It should be much more… our potential growth rate is closer to 8 per cent,” he said, adding that structural reforms are essential for India to achieve higher and sustained economic growth.