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Economy

India’s Forex Reserves Position Comfortable for Import Cover of More than 18 Months & & Cushion Against Unforeseen External Shocks

Weather the reserve funds are adequate to meet the international payment obligations, the Minister said that the ratio of forex reserves to total external debt stood at 101.2 per cent and short-term external debt to forex reserves stood at 17.5 per cent as at end-March 2021.

By Kautilya / August 1, 2021

India’s foreign exchange reserves position is comfortable in terms of import cover of more than 18 months and provides cushion against unforeseen external shocks.  This was stated by Union Minister of State for Finance Shri Pankaj Chaudhary in a written reply to a question in Rajya Sabha on Tuesday (27 July 2021).

Weather the reserve funds are adequate to meet the international payment obligations, the Minister said that the ratio of forex reserves to total external debt stood at 101.2 per cent and short-term external debt to forex reserves stood at 17.5 per cent as at end-March 2021. The ratio of volatile capital flows (including cumulative portfolio inflows and outstanding short-term debt) to reserves was 67.0 per cent at end-December 2020. India is comfortable in most of the external sector vulnerability indicators.

Giving details of India’s foreign exchange reserves in last five years, the Minister tabled the following data:

India’s Foreign Exchange Reserves

YearForeign Exchange Reserves (US$ Billion)
2016-17370.0
2017-18424.5
2018-19412.9
2019-20477.8
2020-21577.0
9th July 2021611.9

Source: RBI

Speaking on the international currencies in our forex reserve, the Minister said the foreign currency assets, constituting more than 90 per cent of India’s forex reserves, are maintained as a multi-currency portfolio comprising major currencies, such as, US dollar, Euro, Pound sterling, Japanese yen, etc.

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