A leaf, hopefully not a stone.

Now every time dire news breaks on the global economy, from rising interest rates to increasing commodity prices, pundits say 'emerging markets' are in the worst spot," wrote Ruchir Sharma. "But by most measures - from current account deficits to currency valuations - the 25 largest developing nations, from India to Brazil, are in strong financial shape." Reassuring. But what does it mean? "India is an exemplar of this trend," because "even in the worst-case projections, India's financial health looks far better than was the case a decade ago." He means in 2013 when, "The pummeling in 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. "The rupee on Tuesday (5 July) fell to a new record low of 79.38 to the US dollar, a day after the country's trade deficit hit an all-time high in June at $25.6 billion, up from $24.3 billion in May." TOI. "The rupee has plunged nearly 6.5% since the start of the year," and "Economists estimate that India's current account deficit, or excess of imports over exports, will touch 3.2% of India's GDP, up from 1.2% last year." Perhaps, Sharma means that India's economy will not fall like a stone but more like a leaf. In February, Sharma wrote, "India's total debt burden spiked from 160% to 175% of GDP, which is unusually high for a country in India's income class." "Lower income nations such as India need to lower their benchmark for success from 7% to 5% or better." That is almost sacrilege. Commerce and Industry Minister Piyush Goyal said that "if India grows at 8% every year," "the economy will double in 9 years time at $6.5 trillion" and "hence after 30 years, it can be confidently put that India will be a $30 trillion economy." ET. World's richest, the suspense is unbearable. Meanwhile, "The Reserve Bank of India (RBI) is estimated to have spent more than $41 billion of its reserves since February this year," to defend the rupee, TOI. A stronger rupee means that foreign investors (FPIs) get more dollars when they sell Indian assets. Foreign investors have sold a record Rs 2.1 trillion worth of Indian stocks in the first half of this year and a total of Rs 2.5 trillion since October, ET. To attract more dollars the RBI has allowed banks to offer higher interest rates on dollar and rupee deposits by non-resident Indians (NRIs), allowed FPIs to buy more government securities and has increased the amount companies can borrow in foreign currency, TOI. All these have to be paid for in the future. All these contortions because the RBI is determined to keep interest rate as low as possible to lower the cost of government borrowing. So, the RBI is directly increasing profits of NRIs and FPIs while penalising domestic savers. "Law mandates the RBI to keep inflation at 4%, which it forecasts to be 6.7% this fiscal. To get to target, it has to raise interest rates sharply which it is reluctant to," and so "For the currency to be stable it has to attract overseas funds with higher interest rates," wrote MC Govardhan Rangan. "Is it the classic case of Robert Mundell's Impossible Trinity at play?" Which says, you cannot have a fixed foreign exchange rate, free capital movement and an independent monetary policy, wikipedia. The RBI is sacrificing its independent monetary policy, its prime function, to help the government. Other central banks are not. There will be a price. Huge one.