Rupee Pressure: Capital Outflows, Not CAD, Says Ex-RBI Chief Subbarao

• Ex-RBI Governor Subbarao states current rupee weakness stems from capital outflows, not macroeconomic imbalances like current account deficit.
• India's external position is strong with CAD around 1%, unlike past crises such as the 2013 taper tantrum.
• FPI exits are due to high valuations, domestic retail participation, and global shifts to AI-linked markets, not fear of India.
• Net FDI has weakened, raising concerns about India's growth story and the lack of pickup in domestic private investment.
• Subbarao recommends improving tax regime predictability and clarity, not just tax cuts, to restore foreign investor confidence.

Why It Matters: Rupee's fall signals capital flight, not economic weakness; tax clarity crucial for investor trust.