Why the doubts?

"After nearly two years of ultra-accommodative monetary policy the US Federal Reserve (Fed) at its December meeting announced it will double the pace of its balance sheet tapering and end its net asset purchases by mid-March 2022, three months ahead of its earlier schedule," wrote Sonal Varma. In 2013, when Fed Chair Ben Bernanke announced that the Fed would start tapering its bond buying program, bond prices fell and yields rose sharply, Investopedia. This came to be known as the Taper Tantrum. The Indian rupee slumped as foreign investors sold Indian stocks. "The pummeling in the markets sent the rupee reeling 3.7 percent to an all-time low of 68.85 with the unit closing just a touch off that, at 68.80/81 per dollar, its biggest single-day fall since October 1995," Reuters. This time, however, "the immediate market reaction to the substantial 'hawkish' pivot from the US Fed can best be described as 'meh'," wrote Varma. Indian stock markets have been rising and the volatility index (India Vix) fell by 2% yesterday, FE. This is because the Fed has given ample warning, the rupee is not relatively overvalued, the "current account recorded a surplus in FY21 (2020-21) and in Q1 FY22 (versus a deficit of nearly 5% of GDP in FY13)", and foreign exchange reserves can cover 12 months of imports. In November the rupee was deemed to be overvalued according to the real effective exchange rate (Reer). "Analysts at independent research firm QuantEco Ltd pointed out that the rupee could be overvalued as much as 10% in Reer terms," BJ. "According to the Reserve Bank of India (RBI) data, overvaluation of the rupee in terms of Reer of a 40-currency basket stood at 5.45% in October. "India's current account slipped into a deficit of USD 9.6 billion or 1.3 percent of GDP in the September quarter," as opposed to a surplus of $6.6 billion in the April-June 2021 quarter. Though ample, "India's foreign exchange reserves fell by $587 million (from $635.080 billion to $635.667 billion) during the week ended December 24," Sify. India's merchandise exports in November were at $30.04 billion while imports were at $52.9 billion, leading to a trade deficit of $22.91 billion, ET. From April to November combined exports of merchandise and services were expected to be $418.74 billion, while combined imports were estimated to be $472.95 billion, Ministry of Commerce and Industry. According to China's General Administration of Customs (GAC), India's imports from China from January-November 2021 amounted to a whopping $87.905 billion, while exports to China were a paltry $26.358 billion, TOI. "India splurged a record $55.7 billion on gold imports in 2021, buying more than twice the previous year's tonnage," BT, because of weddings and possibly as a hedge against inflation as people have little faith in the government. Varma doesn't think that there is any possibility of a tantrum this time. But, what about a deep sulk? Can India afford that?