Managing the rupee

The government and RBI should address overvaluation

Finance Minister Nirmala Sitharaman has been meeting industry representatives over the past few days, giving rise to expectations that the government will announce measures to revive economic activity. It has been reported that industry is looking for a stimulus package worth over Rs 1 trillion. Though the details of a possible plan are not yet public, it is important to note that the government does not have the fiscal space to do so and should think through carefully before committing additional spending or tax concessions. For instance, sectors such as automobiles are demanding a reduction in the goods and services