Reserve Bank of India (RBI) Executive Director D K Mohanty on Tuesday said the country’s import cover reserves might fall further this financial year in the absence of capital inflows. At the end of March, India’s foreign currency reserves were at about seven months of import cover according to data from the central bank. The senior central bank official said financing current account deficit was becoming a problem since capital was not flowing in for a number of reasons. “But we want to maintain our lifestyle and consumption... So, we have to dip into the reserves. We are drawing from the reserves, we built in the pre-crisis period and since then we are not adding anything, it is coming down,” said Mohanty.....
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1 comment:
RBI ED's observations on the status of forex reserves and Current Account Deficit should be taken seriously by policy makers in Delhi. There is need to prune down import of gold for non-essential purposes, to review unrestricted import of 'lifestyle' goods including luxury vehicles, to link inflow of credit to affordable limits and so on. Perhaps RBI should make a quick internal study and advise GOI the steps to be taken on a war-footing.As 2012 is not 1991, it may not be possible to pledge our belongings at the eleventh hour. M G Warrier, Mumbai
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