Economic Survey 2026: Why rupee is 'punching below its weight' & how to contain currency correction  

The ongoing correction in the Indian rupee does not reflect India's economic fundamentals, finds Economic Survey 2026. The government's stance in its policy document on the Indian currency comes on a day when the rupee hit a record low of 92 mark in early deals today. With today's fall, the Indian currency is down 2.5% this year. 

"The rupee’s valuation does not accurately reflect India’s stellar economic fundamentals. In other words, the rupee, therefore, is punching below its weight," the Economic Survey said. 

The Indian currency's weakness also partially offsets the effect of higher US tariffs on Indian economy. 

FULL COVERAGE:  Union Budget 2026

"Of course, it does not hurt to have an undervalued rupee in these times, as it offsets to some extent the impact of higher American tariffs on Indian goods, and there is no threat of higher inflation from higher-priced crude oil imports now. However, it does cause investors to pause. Investor reluctance to commit to India warrants examination," said the survey document. 

The survey also suggests measures to counter the weakness in Indian rupee, primarily caused by the outflows and disruption of capital inflows into the economy. 

"India needs to generate sufficient investor interest and export earnings in foreign currency to cover its rising import bill, as, regardless of the success of indigenisation efforts, rising imports will invariably accompany rising incomes. This has been the historical global experience," the survey document added. 

In the last one year, the rupee has fallen over 6%, making imports pricier and exports cheaper and thus more competitive for the Indian Economy.