Dollars instead of rupees.

"According to calculations by European thinktank Bregel, where countries like China, Brazil and the United States (US) focused anything from 60-90% of their pandemic response packages on fiscal spending, India's program allocated just 12% to this bucket," wrote Rajeev Mantri. Indeed, not only did the government refrain from increased spending, it sucked out "nearly Rs 8.02 lakh crore (Rs 8.02 trillion) from taxes on petrol and diesel during the last three fiscal years, of which more than Rs 3.71 lakh crore (Rs 3.71 trillion) was collected in FY 21 (1 April 2020-31 March 2021) alone, Finance Minister Nirmala Sitharaman informed Parliament" on 14 December 2021. ET. In April 2022, former Finance Minister P Chidambaram said that in the eight years of the Modi government, the central government collected Rs 26,51,919 crore as fuel taxes. "There are approximately 26 crore (260 million) families in India. That means from every family the central government has collected Rs 100,000 as fuel tax," he said. india.com. Even though the international price of crude oil has fluctuated the retail prices of petrol and diesel have been the same since 28 May because the government controlled oil marketing companies (OMCs) absorbed higher prices to prevent inflation from rising even higher, wrote Vivek Kaul. Now that the price of crude has fallen OMCs have maintained retail prices to make up for losses. The Reserve Bank (RBI) has been selling dollars to keep the exchange rate of the rupee below 80 to the dollar to reduce import cost of oil "The foreign currency assets of RBI have fallen from around $580 billion in September 2021 to around $490 billion." "India's central bank is using up its foreign exchange reserves at a quicker pace than during the taper-tantrum period in 2013 as it tries to prevent an overshoot in the rupee, but a larger pool of reserves may allow it to support the currency for some more time, economists said." BS. "Alongside its intervention in the spot market, the central bank's forward dollar holdings have fallen to $22 billion from $64 billion in April." Naturally, the rupee has appreciated against other currencies. "In inflation-adjusted real terms, the rupee has appreciated 8% against the (Chinese) yuan." "The dollar's rise this year is being fueled by the Federal Reserve's aggressive interest-rate increases, which have encouraged global investors to pull money out of other markets to invest in higher-yielding US assets." Mint. "For the US, a stronger dollar means cheaper imports, a tailwind for efforts to contain inflation, and record relative purchasing power for Americans." When the RBI sells dollars for rupees it creates a shortage of rupees in the market. "India's central bank may have to reverse its approach towards currency markets and liquidity management after an ungainly spike in overnight lending rates Monday (yesterday) reflected the near-total erosion in systemic surplus - from about Rs 8 lakh crore (Rs 8 trillion) a year ago to within touching distance of a deficit last week." ET. The other effect of an overvalued rupee is that India exported $21.25 billion worth of goods to China while it imported $94.16 billion and the volume of imports is increasing. ET. We did not spend rupees during the pandemic like other nations so we are having to spend dollars. Not independent of the global economy.