Is it better to panic early?

On the eve of Lehman Brothers anniversary our Finance Minister announced a series of measures to prevent a collapse of the rupee and the economy from tanking. Like what? Mandatory hedging of infrastructure loans in foreign currency maybe removed and companies will be allowed to borrow up to $50 million abroad in short term loans. Restrictions on investments in bonds of private companies by foreign investors and withholding tax on masala bonds, which are rupee bonds sold abroad, will be removed. But, bringing in more hot money without hedging surely exposes India to sudden reversal of flow if the Federal Reserve increases its Funds Rate faster, and Indian companies will face massive repayment bills if the rupee falls even more? The government will restrict imports of "finished electronics, certain textiles, automobiles and high-end consumer products like watches" to try and control our current account deficit. Electronic goods come second to oil in the amount of foreign exchange required. In the 13 months to May we spent $57.8 billion on import of electronic goods, way more than $35.8 billion for importing gold. However, if we reduce imports from any country they will retaliate by cutting things they buy from us. China promptly retaliated to US tariffs by imposing tariffs on the same quantity of imports from the US. "Restricting imports will achieve short term gains, if any, while there will be revenue loss due to customs duty foregone, apart from creating distortions in the market," said a tax expert. The government has already raised customs duty on 400 imported items by huge margins in the last two years. Despite high customs duty, imports from China have shut down hundreds of micro, small and medium enterprises, MSMEs, in India. Why blame China when the government's own tax demands have shut down hundreds of MSMEs, which cannot cope with the complicated Goods and Services Tax, resulting in thousands losing their jobs. The Prime Minister is calling for import substitution, asking people to buy goods made in India rather than imported ones. Import substitution will return our economy to a dirt track, wrote Prof A Panagariya. "India's currency weakened around 22% against the dollar between 2012 and 2017 and the compound annual growth rate in exports during the same period was a meager 0.2%," Wrote N Kwatra. So, the fall in the value of the rupee is unlikely to increase our exports because we import parts to make things we export. If the problems in Turkey are causing such problems, a devaluation of the renminbi in China will really impact India, said R Napier. When there seems no escape it is time to panic. That is what our government just did.