Economic Survey, 2022: India’s foreign exchange reserves swell to US$634 billion

News

oi-Kuntala Sarkar

|

Economic survey of India was released on January 31, 2022 by the union finance minister ahead of the budget. The investigation report mentions that the country’s central bank has accumulated foreign exchange reserves in the recent past. According to the report, despite all the disruption caused by the global pandemic, India’s balance of payments has remained in surplus for the past two years. For this reason, the Reserve Bank of India continues to accumulate foreign exchange reserves, which stand at US$634 billion as of December 31, 2021. This figure is equivalent to 13.2 months of imports and is greater than debt. outside the country.

Economic Survey 2022: India's foreign exchange reserves swell to US$634 billion

Until the end of November last year, the country was the 4th largest holder of foreign exchange reserves in the world, after China, Japan and Switzerland. This accumulation of reserves led to an improvement in external vulnerability indicators such as foreign exchange reserves relative to total external debt, short-term debt relative to foreign exchange reserves, etc.

Moreover, the 2022 Economic Survey stated, “India’s external sector leading sustainability indicators are strong and much improved from what they were during the global financial crisis or downsizing episode. 2013. For example, import coverage and foreign exchange reserves are more important. than double now.” The combination of high foreign exchange reserves, buoyant foreign direct investment and rising export earnings should provide a good buffer against any reduction in liquidity/normalization of monetary policy over the course of the 2022-23 financial year.

Article first published: Monday, January 31, 2022, 11:30 p.m. [IST]