Group Discussion

The Indian rupee has always been an important part of our country’s economy and identity and when we talk about its future, we are not just talking about a currency but also about India’s position in the world economy. The rupee has gone through many ups and downs since independence and today it stands at a stage where both challenges and opportunities are waiting.
To understand the future of the Indian rupee, we need to look at its history,

• current condition,
• factors that affect it,
• the role of government and policies,
• the impact of global trade and international relations and finally the future opportunities and threats.

History of the Rupee

The rupee has a very long history that goes back hundreds of years. The word “rupee” comes from the Sanskrit word “Rupya” which means silver coin. In ancient times, India was famous for trade and Indian coins were widely accepted. After independence in 1947, the Indian government introduced the modern Indian rupee as the official currency. At first, the rupee was linked with the British pound and later it was connected to the US dollar. Over the years due to inflation, wars, oil crises and many economic reforms the rupee has changed in value many times. This historical journey shows that the rupee has faced difficulties but has also shown resilience.

Present Condition of the Rupee

Today, the rupee is a free-floating currency, which means its value is decided by demand and supply in the international market. Currently, the rupee is weaker compared to the US dollar, but it is still stable compared to many developing countries currencies. The Reserve Bank of India (RBI) plays an important role in controlling inflation, keeping prices stable and making sure the rupee does not fall too much. The rupee is also supported by India’s strong foreign exchange reserves, which are among the highest in the world. However, high import bills, especially due to crude oil, put pressure on the rupee.

Factors Affecting the Rupee

The value of the rupee is not decided by India alone many global and domestic factors affect it. Inflation is one major factor when inflation is high, the value of the rupee decreases. Interest rates also matter because higher interest rates attract foreign investors, which increases demand for the rupee. Imports and exports play a key role too when India imports more than it exports, there is more demand for foreign currency, which makes the rupee weaker. Global factors like the price of oil, the strength of the US dollar, geopolitical tensions and foreign investment inflows also decide the rupee’s strength.

Government and RBI Policies

The future of the rupee depends a lot on government policies and RBI’s actions. The government is focusing on making India a 5 trillion-dollar economy and a strong rupee will support this dream. Policies like “Make in India,” “Digital India,” and Production-Linked Incentives (PLI) aim to increase exports and reduce imports, which will help the rupee. The RBI controls monetary policy, regulates the banking system and maintains foreign exchange reserves. RBI also intervenes in the forex market whenever the rupee falls sharply. Their careful balance between growth and inflation is very important for the stability of the rupee.

Globalization and the Rupee

In today’s world, no currency can live in isolation and the rupee is no exception. Global trade, foreign direct investment (FDI), remittances from Indians living abroad and international relations directly affect the rupee. If India strengthens its global trade ties and increases its exports in sectors like IT, pharmaceuticals, textiles and renewable energy, the rupee will automatically gain strength. International organizations like IMF and World Bank also look at the stability of the rupee before giving loans and funds. If the rupee becomes more stable, India can even push for the rupee to be used more in global trade, just like the Chinese Yuan is gaining importance.

Challenges for the Rupee

The rupee has to face many challenges in the future. The first is dependence on oil imports, which puts a heavy burden on foreign exchange. The second is trade deficit, which happens when imports are more than exports. The third is global uncertainty like wars, pandemics or financial crises, which make investors prefer the dollar over the rupee. Another challenge is inflation, which directly reduces the purchasing power of the rupee. India also faces challenges from technology-driven currencies like cryptocurrencies and digital currencies issued by other countries, which may reduce the demand for traditional rupee transactions in the long run.

Opportunities for the Rupee

Despite challenges the rupee has many bright opportunities. India is one of the fastest-growing economies in the world and this will strengthen the rupee. If India continues to attract foreign investors through stable policies the rupee will become stronger. The growth of digital payments, UPI (Unified Payments Interface) and the introduction of India’s own Central Bank Digital Currency (CBDC) will make the rupee more modern and competitive. India’s large youth population and skilled workforce will make exports grow, especially in IT, services and manufacturing. If India reduces dependence on oil by focusing on renewable energy, the pressure on the rupee will decrease.

The Rupee in International Trade

The future of the rupee also depends on how much it is used in international trade. Recently, India has started trade agreements with countries where Indian rupees are accepted directly instead of converting into dollars. This is a big step, and if more countries agree to use rupee in trade, then the rupee will become more powerful globally. The dream of “Internationalization of Rupee” can become true if India continues to grow strongly and builds trust with other countries.

The Future Outlook

Looking ahead the rupee is expected to remain under some pressure because the global economy is uncertain but in the long term, the outlook is positive. India’s strong growth, technology-driven economy and government focus on self-reliance will push the rupee to a better position. The value of the rupee may not become equal to the dollar soon, but what matters is stability and trust. If the rupee is stable, investors and people will have confidence in the Indian economy.

Conclusion

In conclusion, the future of the Indian rupee is a mixture of challenges and opportunities. Inflation, imports and global crises may create problems but India’s strong growth, government reforms, digital innovation and increasing global importance provide a lot of hope. The rupee will continue to reflect India’s economic health and as India rises on the global stage the rupee will also move towards becoming stronger and more respected. The real future of the rupee depends on how India balances growth with stability, reduces dependency on imports and builds trust in global markets.

So, we can say that the Indian rupee may face short-term struggles, but in the long run, it has the potential to shine bright just like the Indian economy itself.

Demonetization has been one of the most debated economic decisions in India in recent history. On 8th November 2016, the Government of India announced that 500 and 1000 currency notes would no longer be legal tender. This move was aimed at controlling black money, stopping corruption, reducing fake currency and pushing India towards a digital economy. While the decision created a huge impact on people, businesses and the economy as a whole, the debate on whether it was a success or a failure is still ongoing. To understand this, we must look at demonetization from different angles like its objectives, benefits, challenges, economic impact, social impact and long-term results.

Objectives of Demonetization

The government had four major goals behind demonetization:

• Curbing Black Money – Large amounts of unaccounted cash were circulating in the economy. The government wanted to bring this into the system.
• Stopping Fake Currency – Fake notes were being used in illegal activities and even in terrorism funding. Demonetization aimed to stop this.
• Encouraging Digital Transactions– India was heavily cash-dependent. The move was expected to increase online payments and banking transactions.
• Creating a Cleaner Economy– By forcing people to deposit cash in banks, the government hoped to bring transparency and reduce corruption.

Immediate Impact on the People

The sudden decision created shock and confusion among common citizens. People had to stand in long queues outside banks and ATMs to exchange or deposit old notes. Daily wage workers, small shopkeepers and rural people faced the biggest problems as they mostly dealt in cash. Weddings, small businesses and even medical emergencies were affected due to the shortage of currency.

Impact on Businesses

Small and Medium Enterprises (SMEs) suffered the most as they operated mainly in cash. Many businesses faced losses and some had to shut down temporarily. Large businesses and corporate adjusted faster because they already had access to digital payment systems and banking support. Real Estate and Gold Markets slowed down since these were the main areas where black money was used. On the other hand, digital payment companies like Paytm, PhonePe and Google Pay saw a huge rise in users, as people started depending on online transactions.

Impact on the Economy

In the short term, the economy slowed down. India’s GDP growth rate fell after demonetization. Cash crunch reduced consumption and many sectors like agriculture, construction and retail were badly hit. However, the government argued that the long-term benefits would outweigh the short-term pain. The banking system received a huge inflow of deposits, which increased liquidity and gave banks the power to lend more.

Positive Outcomes of Demonetization

• Increased Digital Payments – People started using UPI, debit cards and mobile wallets. Today, India is one of the world leaders in digital transactions.
• More People Entered Banking System – Many citizens who never had a bank account were forced to open one. This promoted financial inclusion.
• Temporary Halt to Fake Currency– Fake 500 and 1000 notes became useless overnight, which gave a blow to illegal networks.
• Increase in Tax Compliance – Many people who deposited large amounts of cash had to explain their income, which improved tax collection.
• Greater Transparency – More money entered formal channels, making the economy cleaner.

Negative Outcomes of Demonetization

• Hardship for Common People– Standing in queues for hours, loss of wages and lack of cash created immense trouble.
• Job Losses – Millions of workers in the informal sector lost their jobs due to the slowdown.
• GDP Slowdown – India’s growth rate fell in the following quarters.
• Return of Old Habits– After some time, people again started using cash, showing that long-term behavioral change was limited.
• Cost of Printing New Notes – The government had to spend a huge amount of money to print and distribute new notes.

Social Impact

Demonetization created a mixed social impact. On one hand, people felt proud that they were contributing to the fight against corruption and black money. There was a sense of patriotism in standing in queues, especially in the first few weeks. On the other hand, frustration grew as problems continued for months. Some even lost their lives due to cash unavailability in hospitals and emergencies, which created anger and criticism.

Political Impact

Politically, demonetization became a powerful tool. The ruling government projected it as a bold step against corruption, which gained them support among large sections of the population. However, opposition parties criticized it heavily, calling it a poorly planned move that damaged the economy.

Long-Term Effects

Even years later, the debate continues. Most of the old currency (around 99%) returned to banks, which raised questions about whether demonetization actually exposed black money. However, the positive side is that digital payments have become a permanent part of India’s economy and more people are now part of the formal banking system.

Arguments in Favor of Success

• Boosted digital payments and reduced cash dependence.
• Brought transparency in financial transactions.
• Sent a strong message against corruption and black money.
• Increased tax base and financial inclusion.

Arguments in Favor of Failure

• Did not uncover significant black money as expected.
• Caused huge inconvenience to common people.
• Slowed down economic growth and caused job losses.
• Most black money was not in cash but in assets like real estate and gold, so the impact was limited.

Balanced View

Demonetization cannot be called a complete success or a complete failure. It achieved some goals like promoting digital payments and financial inclusion, but it failed in areas like uncovering black money and reducing corruption permanently. The biggest lesson is that such decisions need better planning, preparation and execution.

Conclusion

To conclude, demonetization was one of the most ambitious and bold experiments in Indian economic history. It had both positive and negative impacts. For some, it was a step towards a modern and transparent economy, while for others, it was an unnecessary shock that caused pain without major results. The truth lies somewhere in between. Demonetization did not completely achieve its main target of eliminating black money, but it did push India towards becoming a more digital and financially included society. Therefore, instead of labeling it only as a success or a failure, we can say it was a mixed experience with lessons for future economic policies.

The Goods and Services Tax (GST) is one of the biggest tax reforms in India after independence. It was introduced on 1st July 2017 with the aim of creating “One Nation, One Tax, One Market.” Before GST, India had a very complicated tax system where multiple indirect taxes were levied by the central and state governments such as VAT, excise duty, service tax, octroi, entry tax and many more. This created confusion, double taxation and extra compliance burden for businesses. With the introduction of GST, all these taxes were merged into a single tax system, which has been seen as both a boon and a bane depending on the perspective of businesses, government and consumers.

What is GST?

GST is an indirect tax levied on the supply of goods and services. It is collected at every stage of the value chain but is designed in such a way that the final burden falls on the consumer. Businesses can claim input tax credit (ITC) on the taxes they have already paid, which reduces the cascading effect of “tax on tax.” GST is structured into four main components:

• CGST – Central Goods and Services Tax (collected by the central government)
• SGST – State Goods and Services Tax (collected by the state government)
• IGST– Integrated Goods and Services Tax (for inter-state transactions)
• UTGST – Union Territory Goods and Services Tax

GST as a Boon for Businesses

1. Simplification of Tax Structure

Before GST, businesses had to deal with multiple indirect taxes. For example, a manufacturer had to pay excise duty, then VAT and also service tax if they used services. Under GST, all these have been merged into one system, which makes it much simpler and easier to understand. This saves time and reduces the burden of handling too many compliances.

2. Removal of Cascading Effect

The biggest benefit of GST is that it removes the problem of double taxation. Earlier, businesses were paying tax on tax at different stages. For example, excise duty was charged on production and VAT was charged on the sale price (which already included excise). Now, under GST, businesses can claim input tax credit for the tax already paid at earlier stages. This reduces cost and increases profit margins.

3. Transparency and Accountability

GST has brought more transparency into the system. Every transaction is recorded online through GST returns, invoices and filings. This makes it difficult for businesses to hide sales or avoid taxes. For honest businesses, this is a boon because the competition becomes fairer and black money circulation is reduced.

4. Encouragement to “One Nation, One Market”

Earlier, businesses had to pay different entry taxes, octroi and state-wise taxes while moving goods from one state to another. Now, under GST, the whole country is treated as a single market. This reduces logistics costs, saves time at state borders and encourages free movement of goods and services across India.

5. Growth of Start-ups and Small Businesses

GST has provided benefits to start-ups and small businesses by offering a composition scheme where small businesses with limited turnover can pay a fixed percentage of their turnover as tax instead of maintaining detailed records. This helps them grow without facing heavy compliance burdens.

6. Digitalization and Modernization

GST has shifted the tax system to an online platform where businesses file returns, pay taxes and claim refunds digitally. This reduces corruption, paperwork and human interference. It also pushes businesses to become more technology-driven and modern.

GST as a Bane for Businesses

1. Complex Filing Process

Although GST was meant to simplify taxes, many small businesses still find the filing process complicated. Monthly returns, multiple forms and online procedures can be challenging, especially for businesses in rural areas or those without digital knowledge.

2. High Compliance Costs

To file GST returns properly, businesses often need to hire accountants or tax professionals. This increases compliance costs, especially for small traders who cannot afford expensive consultants.

3. Burden on Small Businesses

While big companies can easily adapt to GST, many small businesses feel the burden. The requirement to maintain digital records, issue GST-compliant invoices and pay taxes on time becomes difficult for small shopkeepers and unorganized sector players.

4. Issues with Input Tax Credit

Although input tax credit is a major benefit, in practice many businesses face delays in receiving refunds or credits. This creates a cash flow problem, especially for exporters who often wait months for GST refunds.

5. Multiple Tax Slabs

One major criticism of GST in India is that it has multiple tax rates  like 5%, 12%, 18%, and 28%. This makes the system slightly complicated compared to other countries where there is usually a single or double GST rate. For businesses, this means confusion in classifying products correctly, which sometimes leads to disputes and penalties.

6. Initial Implementation Challenges

When GST was first launched in 2017, many businesses faced difficulties in understanding the system, filing online returns, and managing working capital due to delay in refunds. This created frustration and financial pressure.

Impact of GST on Different Sectors

• Manufacturing Sector: Benefited from removal of multiple taxes and easier interstate trade.
• Service Sector:  Initially faced challenges due to higher tax rates compared to earlier service tax but later adjusted.
• E-commerce: GST brought clarity in rules, but compliance requirements like TCS (Tax Collected at Source) added complexity.
• Exporters:  Zero-rated supply under GST benefits exporters, but refund delays create liquidity issues.
• Consumers: In many cases, consumers benefitted from reduced prices due to removal of cascading effect, but in luxury and sin goods, GST rates are high, making them more expensive.

Long-Term Benefits of GST

• Even though there are challenges, GST has long-term benefits:
• It increases tax compliance and government revenue.
• It creates a more formal economy by reducing cash transactions.
• It integrates the Indian economy into a single market, making it easier for global investors.
• It promotes economic growth by reducing logistics and transaction costs.

Conclusion: Boon or Bane?

GST is both a boon and a bane for businesses, depending on how we look at it. In the short term, it created many challenges for small businesses in terms of compliance and digital adaptation. The multiple tax slabs and refund delays are still a concern. However, in the long run, GST has proved to be a boon by simplifying the tax system, removing double taxation, encouraging transparency and building a unified national market. Like any major reform, GST has faced teething problems, but with time and continuous improvement, it will provide huge benefits to the Indian economy and businesses. Therefore, GST can be seen as a transformational reform which is more of a boon than a bane, especially when we think about the future growth and development of India.