Chidambaram asks 'who gradually built Forex kitty?' as India's reserves cross $600 bn mark

With RBI estimating India's forex reserves crossing $600 billion, ex-Finance Minister P Chidambaram on Saturday reminisced the time when India's forex reserves were down to $0.5 billion. Reminding that it was the Congress government's policies that have helped build the nation's forex reserves, he lamented that no one will credit the UPA. His comment comes a day after RBI's monetary policy review which has revised real GDP of FY-22 to 95%

Chidambaram: Who built India's forex reserves?

RBI estimates $600 billion forex reserves

On Friday, RBI Governor Shaktikanta Das announced that India's forex reserves may have exceeded $600 billion mark. 'The success of these efforts is reflected in the stability and orderliness in market conditions and in the exchange rate in spite of large global spillovers. In the process, strength is imparted to the country’s balance sheet by the accumulation of reserves,'' Das added. Previously, India's forex reserves touched a record high of $592.894 billion on May 21, as per reports.

Maintaining the status quo, Das announced that the central bank will keep repo rate unchanged at 4%, as decided by the Monetary Policy Committee (MPC). Addressing the monetary policy review meeting, Das stated that the reverse repo rate will also remain unchanged at 3.35% as economic impact amid COVID-19 second wave is expected to remain contained due to lower restrictions. The RBI has estimated that real GDP will be 9.5% in FY21-22 while inflation is estimated to remain at 5.1%

While RBI had estimated a 10.5% growth previously, with the onset of monsoon and the peaking second COVID wave, RBI has revised it to 9.5%. Detailing quarterly estimates, Das revised Q1 growth to 18.5% from previous forecast of 26.2%, Q2 estimates at 7.9% compared to 8.3%, Q3 at 7.2% compared to 5.4% and Q4 at 6.6% compared to 6.2%. Highlighting RBI's proactive and pre-emptive approach, Das said that Rs 36,545 crore liquidity had been infused in the industry.

India's GDP shrinks by 7.3% in FY 21

India's economy grew by 1.6 per cent in the fourth quarter of 2020-21, restricting the full-year contraction to 7.3 per cent, official data showed on Monday. The fourth-quarter growth was better than the 0.5 per cent expansion in the previous October-December quarter of 2020-21. The gross domestic product (GDP) had expanded by 3 per cent in the corresponding January-March period of 2019-20, according to data released by the National Statistical Office (NSO).