Category: Business

An inauspicious start to Samvat 2083

The Hindu New Year, Vikram Samvat 2083, which began on March 19, has so far not been too auspicious for the Indian Rupee. Just a day after the festive market holiday, trading reopened to a brutal bloodbath for the Rupee, immediately highlighting deep macroeconomic vulnerabilities in the face of a highly volatile global environment.

The March 20 crash: Rupee in free fall

On Friday, March 20, the currency witnessed its worst single-day fall in more than four years. The rupee crashed 108 paise to settle at a staggering all-time low of 93.71 against the U.S. dollar, breaching the psychological 93 mark for the very first time.

The entire month of March has been punishing, with the Indian currency shedding 266 paise, or nearly 2% of its value since the month began, marking its steepest depreciation phase in recent history.

What is the RBI doing?

The Reserve Bank of India (RBI) is actively intervening to prevent a chaotic free fall. The central bank has heavily utilised forward contracts and non-deliverable forwards (NDFs) in offshore markets, alongside selling dollars through state-run banks.

It is estimated that the RBI has already sold over $15 billion in March to support the currency. However, rather than reversing the trend, the central bank’s strategy appears focused on ensuring a calibrated, smooth depreciation to preserve broader macroeconomic stability.

The 5 big reasons behind the plunge

1. Massive FII/FPI outflows: Foreign portfolio investors have been relentless sellers, withdrawing over $8.5 billion (approximately ₹80,000 crore) from Indian equities in March alone, creating severe and immediate dollar demand
2. Surging crude oil prices: The ongoing Middle East conflict has pushed the Indian crude basket past the $156 per barrel mark – its highest level ever. Because India imports over 88% of its crude oil requirements, this directly inflates the national import bill.
3. Geopolitical escalations: The intensifying West Asia crisis between Iran and Israel-U.S. has deeply spooked global markets, driving investors toward safe-haven assets like the U.S. dollar.
4. Widening trade deficit concerns: Chronically high energy costs paired with weak trade data have sparked fears of a ballooning current account deficit, undermining the rupee’s structural resilience.
5. Limited RBI action: The Reserve Bank of India intervened minimally to preserve reserves for growth priorities, allowing market forces to push the Rupee lower. Analysts noted reluctance for aggressive defense. 

Impact on the common man, industry, and economy

The depreciating Rupee has a severe cascading effect. For the common man, it threatens to import inflation, primarily through higher fuel prices and costlier imported electronics.

For the industry, manufacturing companies heavily dependent on raw material imports will see their profit margins squeezed, and those holding unhedged foreign currency liabilities will take direct balance sheet hits.

For the broader Indian economy, a widening trade deficit and rising inflationary pressures will likely delay the RBI’s anticipated interest rate cuts, restricting overall economic growth momentum.

The road ahead: Future outlook

The short-term outlook remains distinctly grim. Currency experts predict the rupee will continue trading with a strong negative bias as long as the West Asia conflict persists and crude oil stays on the boil. Unless geopolitical tensions de-escalate swiftly, the domestic currency may soon test further support levels around the 94 to 95 range against the dollar. Possibly even 100. 

As countries around the world look to follow Australia’s lead and implement a social media ban for kids, many are also considering fines as an enforcement mechanism.

This is part of the playbook when it comes to regulating big tech. For example, last month, the United Kingdom’s data watchdog fined Reddit GBP 14 million (AUD 26 million) for unlawfully using children’s data.

In April 2025, the European Commission fined Apple and Meta €500 million (AUD 820 million) and €200 million (AUD 329 million) respectively for breaching the Digital Markets Act. And in September, the commission fined Google nearly €3 billion (AUD 4.9 billion) for abusive practices in online advertising technology.

But fines don’t always work to encourage companies to follow the law. For some companies, “illegal with a fine” is interpreted as “legal for a price”. So what are some other, more effective methods to encourage good corporate behaviour?

Fines can backfire

If fines are not consistent, immediate and severe, they can backfire. If they do, bad behaviour may increase.

For example, a 2000 study examined the effect of childcare centres in Israel, introducing fines for parents who regularly picked their children up late. But instead, these fines actually increased late pick-ups by parents.

Even after fines were stopped, the number of late pick-ups stayed higher than before.

Why? Because when there were fines, they were small (not severe), and parents could wait a month to pay (not immediate). However, parents got the immediate benefit of longer childcare.

Similarly, technology companies may decide a fine is cheaper than the costs to make changes, or any loss in money from fewer users and ad sales. And this could lead to them continuing with business-as-usual.

Corporate fines often fail because it may be unclear who in the company is directly responsible. Fines can also sometimes be too small to stop bad behaviour by large companies.

For these reasons, corporate re-offending is frequent, even if companies have been fined in the past.

A fine equals forgiveness

After introducing fines, behaviours previously considered socially or morally unacceptable may also be seen as “forgiven” by payment. This can increase bad behaviour.

The importance of unwanted behaviours may also be judged by the size of the fine.

If fines are seen as “small”, violations may also be seen as small, and bad behaviours may rise. Corporations may also see “small” fines as just a cost-of-doing-business.

Importantly, fine size is closely linked to a company’s financial size. For a small company, a fine could seem huge. The same-sized fine may seem tiny to a large company. If similarly sized fines are given to companies making different revenue amounts, the companies may respond differently.

Changing company practices can also cost more for some companies than others. This, too, may affect how they respond to fines.

Furthermore, companies outside a legislative jurisdiction, or that have refused regulators’ demands in the past, may ignore fines altogether.

For example, 4Chan refused to pay fines issued under the UK’s Online Safety Act, and X decided to legally challenge instead of pay a €120 million (AUD 197 million) fine issued by the European Commission.

Given the borderless nature of some digital harms, such as child sexual exploitation and abuse, coordinated changes to corporate laws and international cooperation are needed.

Pulling multiple levers at once

So if fines alone don’t stop big tech and other businesses behaving badly, what will? Research shows that monitoring companies and better-resourced regulators are more effective than fines alone. Consistent regulator inspections combined with education also work well.

A 2025 paper suggests making “stand-alone consumer tech safety research centres” focused on reducing digital harms. This may require technology companies to make data and algorithms available to these centres for inspection.

Then, regulators can look at whether companies are using important and best practice safety features. For example, checking the images on sites to make sure users do not see harmful content online.

Regulators can also share knowledge with companies about laws and digital safety measures to improve consumer protections.

This cooperative model has been shown to be more effective than fines alone.

A 2016 study about what works when it comes to corporate deterrence found that using multiple levers at the same time, such as monitoring, accountability, auditing, and punitive action, was the most effective at stopping bad corporate behaviour.

Unfortunately, understanding the scope of digital harms and best responses has been limited by a lack of resources or access to data.

A 2025 paper highlights that increased data transparency from corporations will also improve evidence-informed decisions, ensuring regulation is fit-for-purpose.

As companies continue to prioritise rapid rollouts, with problems found after launch, fines may continue to be ineffective.

To tackle this problem, online regulators must ensure fines are complemented with other policy levers – and that the punishment for bad corporate behaviour is consistent, immediate and severe.

Published on March 21, 2026