Which one of the following is not the most likely measure the Government/ RBI takes to stop the slide of Indian rupee?

The correct answer is Following an expansionary monetary policy.

Step 1: Understand the Goal
When the Indian Rupee (INR) is sliding (depreciating) against major foreign currencies like the US Dollar (USD), it means there is an excess supply of rupees relative to foreign currency in the market, or a high demand for foreign currency. To stop or reverse this slide, the Government and the Reserve Bank of India (RBI) adopt measures aimed at increasing the inflow of foreign currency (USD) into the country or reducing the outflow of USD.

Step 2: Analyze the Given Measures
Let us evaluate each option to determine its impact on currency depreciation:

1. Curbing imports of nonessential goods and promoting exports:
Curbing imports reduces the outflow of foreign currency (USD needed to pay for imports). Promoting exports increases foreign currency inflows into India. Both measures strengthen the rupee. Therefore, this is a measure taken to stop the slide of the rupee.

2. Encouraging Indian borrowers to issue rupee-denominated Masala Bonds:
Masala Bonds are rupee-denominated bonds issued abroad to raise capital. Since the currency risk is borne by the overseas investor rather than the Indian issuer, issuing these bonds brings foreign currency into India without adding currency depreciation risk to domestic borrowers. This supports the rupee.

3. Easing conditions relating to external commercial borrowing (ECB):
Easing ECB norms allows Indian companies to borrow more foreign currency from foreign sources easily. This increases foreign currency inflows into the country, increasing the supply of foreign currency in the domestic market and supporting the rupee.

4. Following an expansionary monetary policy:
An expansionary monetary policy involves increasing the money supply in the domestic economy and lowering domestic interest rates. Lower interest rates make Indian investments less attractive to foreign investors, potentially leading to capital flight (outflow of foreign funds). Furthermore, an increased money supply can increase inflation and lower currency value, causing the rupee to depreciate further rather than stabilizing it.

Step 3: Conclusion
Following an expansionary monetary policy weakens the currency further. Therefore, it is not a measure taken by the Government/RBI to stop the slide of the Indian rupee.