Are India's opposition politicians/policy makers(and most of the media covering them) blind or deaf or statistically challenged or just that demagoguery is their only religion. Oppose everything(politicians), or objectively analyze everything(media), understand nothing and refuse to ask the real questions, public interest and a 'free' market economy be damned.

The dichotomy of trying to run a market economy with a monetary policy suitable for socialist era is explained brilliantly by Ajay Shah
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India is in a big mess on monetary policy. The attempt that is under way consists of pegging the rupee to the dollar at a time when the dollar has dropped sharply. Dollar prices of many commodities have risen since producers do not like being short-changed with the same number of dollars. Holding Rs 40 a dollar intact, the global increase in commodity prices has been imported into India.
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Long ago in early nineties the first gulf war oil shocks caused a meltdown in an in-efficient license quota raj riddled indian economy(read no one bought anything from us) resulting in a balance of payments crisis. That was then, between now and then the economy was put on a path of economic liberalization but riddled with roadblocks, speed breakers and toll booths just like our highways. The politics in India is so bad that any political party in opposition goes on to oppose the same policies they implemented while they were a part of executive( in power ).

The monetary policy followed by India is best described by this dialog from the bollywood film Rang De Basanti "ek paon past mein, ek paon future mein, isiliye to aaj pe moot rahe hain (we have one leg in past, one leg in future, that is why we are pissing on the present)".

Forbes on the USD 900m underground predictive markets on Indian monsoons. The goal of the government in India should be to abandon moralistic stance and think business. Whether it is wagering on sports or betting on economic variables, or trading in Rupee/forex futures.

Let the Rupee rise. With Indian Stock market at historical highs. The market capitalization of Indian companies is being used to buy valuable assets abroad for use by the large Indian MNCs. However Indian individual investors are still hobbled by the retrograde decisions of the government. The lack of overall liberalization and liberalization of enclaves(SEZs) created by ignoring property rights of land owners, and lack of modernization of city zoning laws and corrupt and non-transparent regulation of realty markets is causing all the fuzz money to raising the rents and land prices.

60-70% of India still lives in rural areas lacking access to sewerage and clean drinking water supply from municipalities. A large proportion of the urban poor also do not have access to municipal sewerage and water supply systems designed only for house owners causing riverine pollution. There is a lot that the government can do instead of wasting Rupees in buying and holding onto USD.

The government must let the individual investors move the currency both ways instead of creating an artificial one way flow of dollars into the economy and then despairing and hand wringing on the imbalance the flows are causing because its hurting exports. The indian individual investor doesn't crave for toys and consumer goods to use the dollars, it craves for the world class financial products not merely mutual funds that invest into overheated equity markets or the now largely in-accessible realty market. The small guys should have the freedom to rise from the bottom of the heap. The indian government has a propensity to favor big business over small guys, this can kill innovation by taxation and heavy-handed regulation.

from http://www.x-rates.com/d/INR/USD/graph120.html
(IANAE- I am not an economist)
It wasn't long ago that the officially administered currency regime pegged the US dollar at Rs 15 and a GBP at Rs 25. The profligate borrowing to finance in-efficiently managed government projects and lack of growth of private industry/service due to all pervasive license quota raj in the late 1980's coupled with oil shocks of the first gulf war caused a meltdown. This saw the country pledge its gold reserves to meet its foreign currency needs and the IMF/WB imposed reforms and liberalization along with certain introspection on the part of the political class. The currency had to be devalued continuously over the next decade and a half to account for lack of productivity in the economy due to 40 years of mis-management, license and quota raj by the bureaucracy and lack of political interest in free market economics.
Is it not the time to let the Rupee rise and let Indians invest into the Internet, Consumer Goods, Power Generation, Roads, Housing and agriculture and not just in India but throughout the world.