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FOREIGN EXCHANGE RESERVES REGISTER INCREASE OF US$ 31.5 BILLION
OVERALL BoP SHOWS SIGNS OF IMPROVEMENT
The rupee has strengthened against the US$ as the rupee US$ exchange rate appreciated to Rs. 46.64 per dollar on January 1, 2010, which was Rs. 50.95 per dollar in end-March 2009. The Indian rupee has appreciated by 9.2 per cent over its March 31, 2009 level, says Economic Survey 2009-10. This has been attributed to significant turnaround in FII inflows, continued inflows under FDI and NRI deposits, better macroeconomic performance of the Indian economy and weakening of the US$ in international markets.
The foreign exchange reserves have increased by US$ 31.5 billion during the period April to December 2009. The level of foreign exchange reserves stood at US$ 283.5 billion compared to US$ 252.0 billion at the end of March 2009.
India’s Balance of Payment (BoP) exhibited considerable resilience during fiscal 2008-09 despite one of the severest external shocks. During the fiscal 2009-10, the net invisibles surplus i.e. invisibles receipts minus invisibles payments stood lower at US$ 39.6 billion during April-September 2009 registering a sign of overall improvement in Balance of Payment scenario during the first half of 2009-10 over the corresponding period 2008-09. The current account deficit increased to US$ 18.6 billion in April-September 2009, despite lower trade deficit as compared to US$ 15.8 billion in April-September 2008, mainly due to lower net invisible surplus.
During the first half of 2009-10 total external debt increased by US$ 18.2 billion i.e. 8.1 per cent to US$ 242.8 billion. In rupee turms the external debt stands at Rs. 1.166.217 crore. Long-term debt posted an increase of US$ 19.2 billion to stand at US$ 200.4 billion while short-term debt fell by US$ 985 million and stood at US$ 42.4 billion.
The Economic Survey 2009-10 however has recognized the interest rates at their historic low in most advanced economies as one of the major challenges. With this the possibility of larger capital flows from these countries into the fast growing Asian economies including India is stated to pose the risk of overheating the economy by excess inflows over the domestic absorptive capacity.
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