MAINS Current Affairs includes Government Committee on Demographic Changes in India & Why is the Indian Rupee Depreciating?

GOVERNANCE

1. Government Committee on Demographic Changes in India

Context: The Union Government has established a high-level committee under the chairmanship of Justice Prakash Prabhakar Naolekar to examine demographic changes taking place across the country. 

Objectives of the Committee

Assessment of Demographic Changes

• The committee will undertake a detailed study of demographic trends across India by:
• identifying regions witnessing unusual population shifts,
• analysing changes among different religious and social groups,
• assessing long-term demographic patterns.

Identification of Causes

• The committee will investigate possible factors responsible for demographic changes, including:
• illegal cross-border migration,
• abnormal settlement patterns,
• organised or orchestrated migration,
• migration driven by economic opportunities,
• socio-environmental factors.

Population Stabilisation

• The committee will recommend institutional mechanisms for:
• population stabilisation,
• long-term demographic monitoring,
• evidence-based policymaking.

Management of Illegal Immigration

• Recommendations will be made regarding:
• identification of illegal immigrants,
• detention procedures,
• time-bound deportation mechanisms.

Strengthening Border Management

• The committee will suggest measures to improve:
• surveillance systems,
• identification mechanisms,
• coordination among security and administrative agencies.

Major Demographic Trends in India

Declining Fertility Rate

• According to the National Family Health Survey-5 (NFHS-5), India’s Total Fertility Rate (TFR) has declined to around 2.0, which is below the replacement level of 2.1.
• This indicates that India is gradually moving towards population stabilisation.

Declining Birth Rate

• According to the Sample Registration System (SRS) Report 2024:
• India’s birth rate declined from 21 per 1,000 population in 2014,
• to 18.3 per 1,000 population in 2024.
• The decline reflects:
• increasing urbanisation,
• higher literacy levels,
• better healthcare services,
• improved access to family planning.

Border-Related Demographic Challenges

India–Bangladesh Border

• India shares a 4,096 km border with Bangladesh through:
• West Bengal,
• Assam,
• Meghalaya,
• Tripura,
• The historic Assam Movement, led by the All Assam Students Union and the All Assam Gana Sangram Parishad, focused on concerns regarding illegal immigration into Assam.

India–Myanmar Border

• India shares a 1,643 km border with Myanmar across:
• Arunachal Pradesh,
• Nagaland,
• Manipur,
• Political instability following the 2021 military coup in Myanmar led to increased movement of Chin refugees and Rohingya migrants into Manipur and Mizoram.

India–Pakistan Border

• India shares a 3,323 km border with Pakistan.
• In Jammu and Kashmir, cross-border infiltration has long been associated with:
• terrorism,
• militancy,
• internal security concerns.

Concerns Related to Demographic Changes

National Security and Sovereignty

• Illegal immigration may create security risks through:
• infiltration,
• organised crime,
• border instability,
• threats to national sovereignty.

Social Harmony

• Demographic shifts based on religion, ethnicity, or language may intensify:
• social tensions,
• identity politics,
• disputes over land and employment.
• The ethnic violence in Manipur involving Kuki and Meitei communities highlighted concerns regarding identity, land ownership, and demographic change.

Resource Distribution Pressures

• Large-scale migration can increase pressure on:
• housing,
• healthcare,
• education,
• welfare schemes,
• employment opportunities.
• Several border districts in Assam and Tripura have expressed concerns regarding land encroachment and competition for public resources due to undocumented migration.

Protection of Indigenous Communities

• Tribal and indigenous communities, particularly in the North-East, fear:
• erosion of cultural identity,
• loss of traditional land rights,
• reduced political representation.

Key Challenges

Absence of Updated Census Data

• The most recent Census was conducted in 2011, while the next Census is expected in 2027.
• This gap may affect:
• demographic analysis,
• policy formulation,
• evidence-based decision-making.

Human Rights Concerns

• There are concerns regarding:
• discrimination,
• social polarisation,
• wrongful exclusion during identification processes.

Federal and Administrative Issues

• Different states may adopt varying approaches to migration-related challenges, creating coordination difficulties between the Centre and States.

Border Management Difficulties

• India’s long and porous international borders require:
• advanced surveillance technologies,
• better infrastructure,
• stronger inter-agency cooperation.

Way Forward

Strengthen Border Infrastructure

• India should improve:
• border fencing,
• surveillance mechanisms,
• technological monitoring systems

to curb illegal infiltration.

Conduct Census on Time

• The government should ensure timely Census operations and strengthen civil registration systems for accurate demographic assessment.

Protect Constitutional Rights

• Any action involving identification, detention, or deportation should strictly follow due process and uphold constitutional safeguards.

Adopt Inclusive Population Policies

• Population stabilisation strategies should focus on:
• women’s education,
• healthcare access,
• awareness campaigns,
• voluntary family planning.
• Coercive population-control measures should be avoided.

Conclusion

The committee on demographic changes seeks to provide a comprehensive understanding of population trends, migration patterns, and their implications for governance, security, and social harmony. A balanced approach that combines effective border management, reliable demographic data, constitutional safeguards, and inclusive development policies will be essential for addressing India’s evolving demographic challenges.

ECONOMY

2. Why is the Indian Rupee Depreciating?

Context: The Indian rupee has witnessed a significant decline against the US dollar, with the exchange rate moving from about ₹85 per dollar in 2025 to over ₹96 per dollar in 2026. This sharp depreciation has raised concerns regarding inflation, external stability, and economic growth.

What is an Exchange Rate?

• An exchange rate represents the value of one currency relative to another. It indicates how much of one currency is required to purchase a unit of another currency.
• For India, the rupee-dollar exchange rate shows the number of rupees needed to buy one US dollar.
• Exchange rates are primarily determined by the forces of demand and supply in international currency markets.

Reasons Behind the Fall of the Indian Rupee

1. Persistent Trade Deficit

• India consistently imports more goods than it exports, resulting in a merchandise trade deficit.
• To pay foreign suppliers, Indian importers must convert rupees into dollars, increasing demand for the US dollar. Higher dollar demand weakens the value of the rupee.

2. Rising Crude Oil Prices

• India imports a substantial portion of its crude oil requirements.
• An increase in international crude oil prices:
• raises India’s import bill,
• increases demand for dollars,
• puts downward pressure on the rupee.
• Since oil imports constitute a major share of India’s foreign exchange expenditure, fluctuations in oil prices significantly influence the exchange rate.

3. Current Account Deficit (CAD)

• India regularly records a Current Account Deficit because the value of imports exceeds exports.
• Although foreign exchange earnings from:
• IT and software services,
• remittances from overseas Indians,
• tourism and other services

help offset the deficit, they are often insufficient to completely bridge the trade gap.

4. Foreign Portfolio Investment (FPI) Outflows

• Foreign Portfolio Investments refer to investments by overseas investors in:
• stocks,
• bonds,
• financial securities.
• These investments are highly volatile.
• During uncertain global conditions, foreign investors often withdraw funds from emerging markets like India, resulting in capital outflows and greater demand for dollars.

5. Higher US Interest Rates

• When interest rates rise in the United States, global investors tend to shift their funds toward US financial assets because they offer:
• higher returns,
• lower perceived risk.
• This movement of capital from emerging economies to the US strengthens the dollar and weakens currencies such as the rupee.

6. Global Geopolitical Uncertainty

• International conflicts and geopolitical tensions increase uncertainty in global financial markets.
• In such situations, investors usually move their investments into “safe-haven” assets, especially the US dollar.
• As global demand for dollars increases, the dollar appreciates while the rupee depreciates.

Impact of a Falling Rupee on India’s Economy

Inflationary Pressures

• A weaker rupee makes imports more expensive.
• Higher import costs increase:
• fuel prices,
• transportation expenses,
• production costs,
• prices of essential commodities.
• This leads to imported inflation within the economy.

Increase in External Debt Burden

• Indian companies that have borrowed in dollars must repay more rupees when the domestic currency depreciates.
• This:
• increases debt-servicing costs,
• reduces profitability,
• weakens corporate balance sheets.

Financial Market Volatility

• Large-scale FPI withdrawals can:
• trigger stock market declines,
• increase market uncertainty,
• weaken investor confidence.

Export Competitiveness

• A weaker rupee makes Indian exports cheaper for foreign buyers.
• This can improve competitiveness of:
• textiles,
• pharmaceuticals,
• engineering goods,
• IT services.
• However, the benefit is limited because many Indian industries rely on imported raw materials and intermediate goods, whose costs also rise when the rupee depreciates.

Role of the RBI in Stabilising the Rupee

Foreign Exchange Market Intervention

• The Reserve Bank of India intervenes in both spot and forward currency markets.
• During sharp rupee depreciation, RBI sells US dollars from its foreign exchange reserves to increase dollar supply.
• During periods of excessive inflows, RBI purchases dollars to prevent excessive appreciation.

Monetary Policy Measures

• The RBI uses interest-rate tools and monetary policy to support currency stability.
• Higher interest rates can:
• attract foreign capital,
• increase demand for the rupee,
• improve investor confidence.
• The RBI also focuses on controlling inflation, which is crucial for maintaining currency strength.

Liquidity Management

The RBI manages liquidity through instruments such as:

• Cash Reserve Ratio (CRR),
• Statutory Liquidity Ratio (SLR),
• Liquidity Adjustment Facility (LAF).
• These measures help reduce excessive volatility in financial markets and maintain overall stability.

Way Forward

Reduce Dependence on Imported Oil

• India should accelerate:
• renewable energy adoption,
• electric mobility,
• domestic energy production,

to reduce vulnerability to global oil price shocks.

Maintain Strong Forex Reserves

• Adequate foreign exchange reserves provide a buffer against external shocks and enable effective RBI intervention during periods of volatility.

Ensure Macroeconomic Stability

• India should focus on:
• fiscal discipline,
• low and stable inflation,
• sustainable economic growth,
• investor-friendly policies.
• These measures will strengthen confidence in the Indian economy and support the rupee over the long term.

Conclusion

The depreciation of the rupee is driven by a combination of domestic and global factors, including trade deficits, rising oil prices, capital outflows, and global uncertainty. While a weaker rupee may provide some export advantages, its overall impact includes higher inflation and increased external vulnerability. A balanced strategy involving energy security, prudent fiscal management, strong forex reserves, and stable macroeconomic policies is essential for maintaining long-term exchange-rate stability.

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