S. Vikram, Political Commentator
On the rupee, the gold, and a record dividend, the government is managing the headlines better than it is managing the economy.
In the space of a single fortnight, India has been told that its central bank did not sell $12 billion of gold, that it has handed the government its largest-ever dividend, and that Washington is preparing yet another tariff on Indian goods — this time for ‘forced labour.’
Each of these was met with the same official posture: calm, technically worded, faintly irritated at the question. It is the calm that ought to worry us. Beneath it sits an economy under genuine strain and a policy establishment that increasingly treats the management of perception as a substitute for the management of risk.
Gold
Start with the gold. Bloomberg Economics inferred, from a fall in the value of the Reserve Bank’s bullion holdings during a fortnight of acute rupee pressure, that the central bank had quietly sold gold to free up liquid dollars.
The RBI and the government’s fact-checkers denounced the report as ‘fake,’ pointing to physical tonnage that has barely moved. Bloomberg Economics withdrew its report two days later.
Economics of Dividend
The RBI has transferred a record ₹2.87 lakh crore to the Centre for FY26. The official explanation is almost too neat: the surplus was swollen by gains on foreign-exchange operations and by the revaluation of dollar assets — which is to say, the very depreciation of the rupee that is making fuel, fertiliser and imported goods costlier for ordinary households also fattened the central bank’s books, and that windfall has now been routed to a government straining to meet its deficit targets.
One can accept that the accounting is lawful and still find the arrangement uncomfortable. A central bank is meant to be the economy’s shock absorber, holding capital precisely so it can act when shocks arrive.
To channel a record payout to the treasury at the exact moment that external shocks are multiplying, and during a period when questions about the bank’s autonomy are already live, is to spend institutional credibility to buy fiscal room.
That trade may look cheap today. It will not look cheap the day the RBI’s independence actually needs to be believed.
Real Value of Rupee
Meanwhile the rupee keeps sliding. It lost nearly a tenth of its value in 2025 and has shed more this year, drifting toward 97 to the dollar even as the RBI has spent tens of billions in the market defending it.
This is the heart of the matter, and it is a choice dressed up as prudence.
Every dollar sold to slow the fall is firepower spent — and the rupee falls anyway, just more slowly and more expensively. Intervention on this scale does not fix the underlying current-account pressure from costly oil or the steady exodus of foreign portfolio money; it buys a ‘stable rupee’ headline while quietly draining the reserves that are supposed to be the country’s insurance.
A market propped largely by domestic retail savings is not a vote of confidence. It is an orderly exit for everyone else.
Foreign Policy
And all of this unfolds against a foreign-policy failure that the government would rather we filed under “global headwinds.” India was hit last year with tariffs as high as 50 percent over its Russian-oil purchases — among the steepest Washington imposed on anyone.
Now comes a proposed additional 12.5 percent under a “forced labour” pretext, with India once again on the list. Whatever the merits of strategic autonomy, the test of a foreign policy is whether it insulates the citizen from precisely this kind of repeated, targeted economic punishment.
By that test, it has not. To be repeatedly singled out by one’s largest market is not the price of principle; it is, at minimum, evidence that the relationship has been managed badly.
Rumors
It is in this climate that the darker rumours breed — among them the unproven claim that Washington leaned on New Delhi to hold, rather than sell, its US Treasury holdings, and that this is what nudged the central bank toward touching its gold.
Let us be precise: there is no public evidence for it, and no clean mechanism by which one state formally forbids another from selling the bonds it owns. In ordinary times the story would be dismissed in a sentence.
But a government that swallowed fifty-percent tariffs without visible reply, that finds itself singled out by its largest market again and again, and that explains none of it candidly to its own people, has forfeited the standing to wave such a rumour away with a denial.
That it cannot be cleanly refuted is no proof that it is true; it is proof of how little we have been told — and of an unusual, unexplained leverage that this dispensation has never accounted for. In the space left by that silence, the citizen is free to imagine the worst.
Actual loss
Let us be fair about what this is not. This is not 1991. India is not airlifting gold to London to stave off default; it sits on close to $690 billion in reserves. But that is the point, not the comfort.
The danger here is not insolvency — it is the slow normalisation of bad habits a strong country can afford to indulge: leaning on the central bank, defending an indefensible exchange rate, and answering hard questions with press releases.
The real deficit on display this fortnight is not fiscal or external. It is a deficit of candour. And candour, unlike forex reserves, cannot be borrowed back once it is spent.
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