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.

Contrast the cost of acquisition for comparable number of mobile phone subscribers acquired by Vodafone and Reliance.

When Reliance first launched their CDMA phones into the indian market they offered them for near free(Rs. 500 about USD 12) and gained a substantial market share in no time. They probably lost say about Rs. 4000(about USD 100) to acquire a customer. Reasonable cost of direct customer acquisition compared to Vodafone's almost 1000 USD per subscriber for Hutch to gain a foothold into the market created as a direct result of Reliance audacious entry into the telephony in India.

Rather Vodafone could have acquired the smallest player in each circle(or bought a unified license directly from government) and offered USD 300(Rs. 4000) free talktime/free Internet with every free phone(or something similar) and gotten into the market a substantially lower price.

But what do I know ;-)