India’s foreign exchange reserves have plummeted to a 10-month low of $634 billion, down nearly $70 billion from their all-time high. Sandip Sabharwal, a prominent market analyst and former head of equity at SBI Mutual Fund, has attributed this decline and the broader economic slowdown to the policies of former Reserve Bank of India (RBI) Governor Shaktikanta Das.

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Das, who served as RBI Governor from December 2018, to December 2024, retired last month after a six-year tenure. While his tenure was marked by critical moments such as the Covid pandemic and volatile global economic conditions, Sabharwal has raised sharp criticisms of Das’ approach to managing the economy.

Sabharwal took to social media to express his views, stating, “India’s Forex Reserves crash to a 10-month low of $640 billion. Nearly $70 billion off all-time highs. The previous RBI Governor’s foolish policy of keeping the INR stable and wasting huge Forex Reserves via spot and forward USD sales when the Dollar was in a tearaway rally against all currencies has created this scenario.”

“He (Das) also overestimated growth and kept liquidity tight and rates high, which has also led to a slowing economy. Too many people praised him too much, and he was running an autocratic policy which is costing the country now.”

During Das’ tenure, the RBI employed aggressive interventions in the forex market to stabilise the rupee amid global turbulence. While these actions were widely praised for providing immediate stability, critics argue they came at a cost, depleting reserves and tightening liquidity during crucial periods.

Market analysts have highlighted that during Das’ tenure, the RBI sold significant portions of its Forex reserves in spot and forward markets to shield the rupee from volatility. While the approach won praise for providing stability in the short term, it has drawn criticism for its long-term implications.

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India’s foreign exchange reserves have now fallen for the fifth consecutive week, reaching $634.59 billion as of January 3, according to the latest RBI data. The reserves have dropped by nearly $70 billion from their all-time peak of $704.89 billion recorded in late September.

The rupee has faced persistent challenges in recent weeks, closing at 85.9650 to the dollar on Friday after briefly touching a record low of 85.97 during the session. This marks its tenth consecutive weekly decline, fueled by a strong dollar and reduced capital inflows as India’s economic growth slows.

Nomura analysts noted that the RBI’s interventions may have inadvertently led to increased capital outflows and “dollar hoarding” as market participants anticipate further rupee depreciation. They added that changes in foreign currency assets within the reserves are influenced not only by market interventions but also by fluctuations in the value of foreign holdings.

India’s economic trajectory also signals a slowdown, with the Central Statistics Office projecting GDP growth of 6.4% for fiscal 2024-25, the slowest in four years. The RBI revised its own projection for the previous fiscal year downward from 7.2% to 6.6%, underlining concerns about the country’s decelerating economic momentum.