In 2013 the INR experienced rapid depreciation, and for the first time touched the level of Rupees 68/USD. No other currency in the world depreciated to this extent. This sort of extreme volatility is not bad for the economy, it’s hazardous. Such kind of volatility creates an environment of uncertainty and dissuades new and existing investors ergo hurting the economic growth. In the wake of these events the RBI took some measures and tried in every way to stop this fall but the fact is that RBI has no muscle to affect the exchange rate even in a faintly significant manner. This incident has shown how fragile our economy is and how easily and how close we can get to financial crisis. RBI has hitherto followed managed forex(foreign exchange) policy and never had a vision for it. But this event has exposed the Indian economy, and made it clear that the economy cannot run forever on good luck. Indian fiscal deficit is rising and crossed the danger level of 5.2 % (forecasted 2014); current account deficit has reached 4.8% of the GDP, RBI never had been able to tame inflation, India has developed strong dependence on foreign capital. India very badly needs structural reforms, but the focus seems to be absent. With this structure India is just waiting for a exogenous macro-economic shock to trigger a systemic crisis.