At $612 Billion, India's Forex Reserves Position Comfortable For Import Cover Of Over 18 Months: Govt

India's forex reserves position is comfortable in terms of import cover of more than 18 months and provides cushion against unforeseen external shocks, the government informed the Parliament on Wednesday (27 July).

In a written reply to a query in the Rajya Sabha, Union Minister of State for Finance Pankaj Chaudhary tabled the data of India’s foreign exchange reserves in last five years.

According to the data tabled by the minister, India's Forex Reserves stood at $371 billion in Financial Year (FY) 2016-17, $424.5 billion in FY18, $412.9 billion in FY19, $477.8 billion in FY20 and $577 billion in FY21.

In the current financial year, as of 9 July, the forex reserves have surged to nearly $612 billion, the data revealed.

Responding to a query on whether 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, a Ministry of Finance release said.

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, the minister said.

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.