The Reserve Bank of India (RBI) has revealed in its latest report that the South Asian country’s foreign exchange reserves (or forex reserves) went up by USD 2.54 billion to USD 353.40 billion as of March 11.
The Indian central bank’s weekly statistical statement shows that the amount of total reserves was USD 353.40 billion on March 11 (up from USD 350.86 billion on March 4). As far as the foreign currency assets are concerned, they jumped from USD 327.47 billion on March 4 to USD 329.99 billion on March 11. There was also an increase in India’s gold reserves that stood at USD 19.32 billion on March 11. While Special Drawing Rights (SDR) of the country stood at USD 1.48 billion on March 11, the volume of Reserve Position in the International Monetary Fund (IMF) was USD 2.59 billion.
Earlier, the IMF predicted that the recent slump in global oil prices would bring good news for the Indian economy. The global lender termed the slump as a “large windfall” for New Delhi, saying that it would allow the South Asian powerhouse to spend more on goods and services. The IMF also predicted that there would be a “sharp decline” in inflation in India.
Speaking at a press conference in the capital last week, head of the IMF team for India Paul Cashin said: “The collapse in global oil prices is a large windfall gain for India. The windfall has made room for more spending on goods and services, helped improve the external and fiscal positions, and allowed a sharp decline in inflation.”
According to Cashin, crude prices have sunk around 70% over the last 18 months to around USD 35 per barrel. Keeping the scenario in mind, the IMF has mentioned in a report that India’s GDP will grow from 7.3% in the current financial year to 7.5% next fiscal despite an uneven economic recovery.
At the same time, the international organisation headquartered in Washington D.C. has warned that the investment cycle in India will take time to gain strength, as the banking system is overburdened with bad loans and the weaker global economy hits the country’s exports hard. It will also be difficult for India to sustain its growth momentum, although private investment has started showing a few signs of revival, stressed the IMF.
Meanwhile, Cashin has congratulated the RBI for implementing governance reforms in public sector banks in an attempt to ensure the durability of the Indian growth recovery.