Which one of the following is not the most likely measure the Government/RBI takes to stop the slide of Indian rupee?
Correct Answer: Option D
To prevent the slide of the Indian Rupee, the Government/RBI typically takes measures to increase foreign exchange inflows and decrease outflows.
Option A: Curbing non-essential imports and promoting exports increases foreign exchange reserves, thus supporting the rupee.
Option B: Encouraging Indian borrowers to issue rupee-denominated Masala Bonds reduces the demand for foreign currency, as the borrowing is in rupees, alleviating pressure on the rupee.
Option C: Easing conditions for External Commercial Borrowings (ECBs) can lead to increased foreign capital inflows, providing a temporary boost to foreign exchange reserves and preventing the rupee's decline.
Option D: An expansionary monetary policy typically involves lowering interest rates. This can lead to: * Capital Outflow: Lower interest rates may encourage foreign investors to move their capital to countries with higher returns. * Increased Imports: Increased government spending due to expansionary policy leads to higher imports. These factors can further depreciate the rupee.
Therefore, following an expansionary monetary policy is NOT the most likely measure to stop the slide of the Indian rupee.
Hence, option D is the correct answer.