The country's foreign exchange (foreign exchange) reserves accumulate from investment flows are not "ours" because there are liabilities for them. Therefore, forex kitty works as a buffer against exchange rate volatility and is not intended to fund programs, say analysts and experts.
There is a lot of cheap money at home and abroad to finance sustainable infrastructure (infra) projects, as the world's central banks, including India, have breathed liquidity to fight the recession and fuel demand.
The issue has resurfaced after the Union Roads and Highways Minister Nitin Gadkar on Wednesday allowed the Reserve Bank of India (RBI) to increase its foreign exchange reserves for infrared development, as well as road projects. The country needs low-cost funding for such infrared projects, he told the Indian Confederation of Industry.
India's foreign exchange reserves rose $ 9.42 billion to $ 620.57 billion in the week ended July 30. The accumulation of reserves since the end of March amounted to 43.6 billion dollars.
In fact, during an interview last month Business standard:, RBI Governor Shaktikanta Das said. "That reserves are not our own money. "It's not that we built it with a trade surplus."
"If we have reserves, we owe them. "Capital inflows are a great investment in our reserves," Dass said.
Concerns about the use of financial foreign exchange reserves, MADAN SABANAVIS, chief
economist at CARE Ratings, said that just as the RBI absorbs excess cash, it also has obligations to meet the system's requirements when foreign investors borrow money. "Thus, the collection of hard currency resources is a burden և not available for internal purposes (for example, to provide money to finance programs)," he said.
ICRA Ratings chief economist Aditi Nayar also voiced reservations about the use of policy normalization around the world (read about raising interest rates by central banks). "It simply came to our notice then. "We must unite at the level of foreign exchange reserves as an arsenal to prevent any crisis," he said.
Former R
BI Governor Raguram Rajan, who headed the central bank in 2013 when India faced slow-moving anger pressure, also opposes other uses of foreign exchange reserves.
"India needs
a foreign exchange buffer to protect itself from exchange rate volatility, as we have no 'friends' for exchange lines. "Japan aponia was the only country that helped slow down 2013," Rajan said at a seminar last month. National Council for Applied Economic Research.
Referring to the huge liquidity in the market, Sabanavis said that the RBI penetrated the liquidity through long-term repo target operations at low interest rates for lending. "Besides, liquidity does not happen regardless of the dollar. "The RBI buys them, which leads to the penetration of rupee funds into the system," he said.
Commenting on Sabanavis, Anant Narayan, an associate professor at the SP Jain Institute for Management and Research, said that it makes no sense for the FBI to provide commercial loans to Indian infrared companies when there are so many cheap funds on the market. "Inf's infrared organization does not need an RBI loan to start importing capital goods for the project," he added.
تعليقات
إرسال تعليق