Henry Kissinger would mock the European Union’s incapacity for collective decision-making by asking “whom should we call?” at a time of crisis. As the rupee plummets and India confronts serious economic challenges, there is a similar sense of “who is in charge?” And the answer to that question, which must now be said, is: “Whoever they are (or not), change them.”
Why is a change in personnel overdue? For a start, near-crises moments require conveying a sense — creating a perception or narrative — that someone decisive is at the helm. The need of the hour is for a credible interlocutor with a clear message, like a Mario Draghi who said “we will do whatever it takes.”
Consider the two key centres of economic decision-making. From New Delhi, there is silence and drift, and from Mumbai, there is a sense of events overwhelming the protagonists. Even the Prime Minister’s exhortation to private sacrifice had the effect of raising the alarm, but the long trip abroad that followed only reinforced the sense, at home, of a vacuum of decision-making and the absence of a clear agenda of follow-up actions.
There is, however, a more substantive reason for changing personnel across the board, which relates to what the government must stop doing as opposed to what more it must do. Consider this.
The rupee crisis today is only partly related to the Iran war and the consequential shock to energy-dependent India. It reflects as much or more doubts about India’s medium-term growth prospects. One supporting piece of evidence is that the rupee was the worst-performing amongst comparator emerging market countries even before the war.
In the two or three years preceding the war, no country, with the exception of Turkey, experienced as much of a currency decline, despite as much of an effort by the central bank to defend the currency. Between 2022 and February 2026, the rupee declined by over 20 per cent despite the RBI interventions in spot and forward markets, amounting to about 50 per cent of the stock of foreign assets.
The behaviour of the rupee has highlighted what the official numbers have obscured for some time — that investors are losing confidence in the Indian economy. They have, belatedly, recognised the message from one indicator that has been flashing red for some considerable time: Private corporate investment. This peaked at 17 per cent of GDP in the early 2000s and today is at half that amount. There was a brief post-Covid blip but that has faded. Weak private investment is the key problem for the Indian economy, and reviving it is the critical challenge.
But how does this translate into a call to change personnel and not simply a call to policy “reform”? The problem is that, to the government’s credit, it has implemented several reforms recently aimed at reducing the costs of doing business.
It has cut and simplified the Goods and Services Tax (GST), rationalised and improved labour laws, liberalised foreign direct investment into more sectors (FDI), and above all, concluded a free trade agreement with the European Union and provisionally agreed to a trade deal with the United States. And it has two committees entrusted with deregulating the economy. The government can throw up its hands and legitimately plead, “what more can we do?”
These reforms have, however, not reassured investors. The key distinction that hints at a resolution of the paradox — and explains weak private investment — is between actions taken by the government on paper that affect the costs of doing business and the deeper instincts of the government that affect the risks of doing business on the ground.
These instincts include: Tilting the regulatory playing field in favour of a few, large corporate houses at the expense of other investors, domestic and foreign; favouring BJP states over opposition-run ones in allocating resources and directing investment flows; weaponising the state’s coercive apparatus to target political opponents and business; overzealously and arbitrarily implementing tax laws, and undermining India’s federal decision-making structures. They neither engender confidence nor trust.
One could think of the call to policy reform as extending the “to-do” list. In contrast, addressing the bad instincts problem is more like a “not to do” list.
Changing personnel at ministerial, technocratic, and bureaucratic levels is one — perhaps the only — way the government could signal a departure from these instincts and habits. The government must recruit fresh talent, prized for its quality, independence, and new ideas, not loyalty and cheerleading. Officials must become more open and realistic about acknowledging the ongoing challenges.
Sameness of personnel and staleness of ideas are fatal for all political systems. Even politically dominant rulers must limit message management and embrace churn. The truth is that this leopard has to change its spots or else the Indian economy will continue paying the price.
The writer is an Indian economist and the former Chief Economic Advisor to the Government of India (2014-18). He is currently a Senior Fellow at the Peterson Institute for International Economics, Washington DC
