Lok Sabha Question No. 548 (UNSTARRED), answered on 2023-02-06
Subject: Decline in Foreign Exchange Reserve
Ministry: FINANCE
Asked by: Kotagiri Sridhar, Vellalath Kochukrishnan Nair. Sreekandan

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA

## UNSTARRED QUESTION NO. 548 TO BE ANSWERED ON 06.02.2023

## Decline in Foreign Exchange Reserve

## 548.  SHRI SRIDHAR KOTAGIRI : SHRI V.K. SREEKANDAN :

Will the Minister of FINANCE be pleased to state:

- (a) whether the country's foreign  exchange  reserves  have  in  recent  months  witnessed  a steep decline, if so the details thereof:
- (b) whether  the  Government  is  taking/intends  to  take  measures  in  order  to  stabilise  the Gold and Forex reserves available with the country, if so, the details thereof and if not, the reasons thereof;
- (c) whether the forex reserves of the country has declined by 691 million US dollars to approximately 562 billion US dollars as of December 23, 2022 making it the second consecutive week of decline in the forex kitty and if so, the details thereof; and
- (d) whether the forex reserve had been declining to defend the rupee amid pressure caused by global development and if so, the details thereof?

## ANSWER

## THE MINISTER OF STATE FOR FINANCE (SHRI PANKAJ CHAUDHARY)

(a) to  (c): The Foreign Exchange Reserves of India stood at US$ 607.3 billion as endMarch 2022 followed by a declining trend largely, till October 2022, when it stood at US$ 524.52 billion as on 21 st October, 2022. Thereafter, it has been on an increasing trend. The forex reserves were at comfortable level of US$ 562.72 billion as of end-December 2022, covering 9.3 months of imports. Further, as on 27 th January 2023, the Reserves stand at US$ 576.76 billion.

Accretion to or depletion of forex reserves depends on the amount of net capital inflows through  the  capital  account  and  the  absorption  of  such  inflows  by  the  economy  as measured by the balance on the current account of the balance of payments. If the capital inflows are more than the absorptive capacity represented by the current account deficit (CAD), the excess capital inflows would add to the forex reserves.

The Government has taken various measures to encourage foreign direct investment and foreign portfolio investments and also enhance exports. The Government has taken, interalia, the following measures to boost exports and reduce trade deficit:

-  Foreign Trade Policy (2015-20) extended upto 31-03-2023.
-  Interest  Equalization  Scheme  on  pre  and  post  shipment  rupee  export  credit  has also been extended upto 31-03-2024.
-  Assistance provided through several schemes to promote exports, namely, Trade Infrastructure  for  Export  Scheme  (TIES)  and  Market  Access  Initiatives  (MAI) Scheme.
-  Remission of Duties and Taxes on Exported Products (RoDTEP) scheme.
-  Districts  as  Export Hubs has been launched by identifying products with export potential in each district, addressing bottlenecks for exporting these products and supporting local exporters/manufacturers to generate employment in the district.

To  promote  Foreign  Direct  Investment  (FDI),  the  Government  has  put  in  place  an investor-friendly policy, wherein except for a few sectors, most sectors are open for 100% FDI under the Automatic route. Further, the policy  on  FDI  is  reviewed  on  an  ongoing basis, and its provisions have been progressively liberalized and simplified across various sectors in the recent past to make India an attractive investment destination.

- (d) The value of the Indian Rupee (INR) is market-determined. The RBI intervenes only to maintain  orderly  market  conditions  by  containing  excessive  volatility  in  the  exchange rate, without reference to any pre-determined target level or band.

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