---
title: "Mini crisis, self-inflicted: Policy missteps leave the rupee under pressure"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/288178651.md"
description: "India faces a self-inflicted mini foreign-exchange crisis, with the rupee depreciating nearly 12% against the dollar due to simultaneous current and capital account deficits. The government is considering reforms, including tax cuts for foreign investors and restrictions on capital outflows, to stabilize the currency. Experts attribute this to policy missteps that discouraged foreign capital, exacerbating structural vulnerabilities like high import dependence and insufficient domestic savings needed to sustain economic growth ambitions."
datetime: "2026-05-31T08:10:43.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/288178651.md)
  - [en](https://longbridge.com/en/news/288178651.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/288178651.md)
---

# Mini crisis, self-inflicted: Policy missteps leave the rupee under pressure

Once again, only after India has stumbled into a mini foreign-exchange crisis is the government contemplating reforms. According to news reports, New Delhi is preparing measures to support the rupee and finance a widening current-account deficit (CAD). These may include reducing long-term capital gains tax (LTCG) on listed equities and government bonds and lowering withholding tax on interest income earned by foreign investors. To curb capital outflows, officials are also considering reducing the annual limit under the liberalised remittance scheme (LRS) from the current $250,000 per individual.

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