Former Niti Aayog vice-chairman Arvind Panagariya has opined that rupee depreciation was long overdue, saying appreciated currency had hurt the country’s exports.

Panagariya further said India’s macroeconomic management is sound and there was no reason to worry. “The main news recently in the macro story is depreciation of the rupee. But this had been long overdue. The real exchange rate has seen large appreciation in recent years and this has hurt our exports,” he told PTI in an interview.

The rupee on August 16 slumped to a life-time low of 70.32 to the US dollar on strong demand for the greenback. The rupee on Friday staged a good recovery to end higher by 20 paise at 69.91 against the US currency. Panagariya who is currently a professor of economics at Columbia University further said, “I am personally very pleased the RBI has used our foreign exchange reserves prudently in managing the exchange rate.”

Replying to a question, the former Niti Aayog vice chairman said that he expects India’s growth rate to cross the 8 per cent mark by the third or fourth quarter of fiscal 2018-19. “I am confident that in less than ten years we will cross the UK, Germany and Japan to become the third largest economy in the world,” he predicted.

On the possibilities of populist measures being announced by the Modi government ahead of 2019 general elections, Panagariya said that the risk is omnipresent “but I do not see this happening.” The government, he said, has more or less announced its revenue and expenditure trajectories. “I also firmly believe that Prime Minister Modi worked hard to place the nation’s finances on a firm footing and he will not risk the nation’s future to gain a small political advantage on the margin,” Panarariya insisted.

He also pointed out that FDI in India in 2017-18 has been slightly higher than in 2016-17 and 70 per cent higher than in 2013-14. Stating that inflation in July at 4.2 per cent was lower than 4.9 per cent in June, Panagariya said, “In my view, inflation in the neighbourhood of 5 per cent for a rapidly growing developing country is about right since it allows relative prices to adjust and provide the necessary signals to investors.”