International Liquidity of India is critical
--Dr.Debesh Bhowmik
We have noticed that the world financial crisis which was originated in USA
and subsequently spread all over the world , has sufficient spill over in India too. Even, the
Euro crisis affected too much in India in the external sector.In both the
cases, India’s International liquidity has been worsen and we faced capital inflows and fiscal deficit
simultaneously.Even, the current account deficit had increased to a significant
level.Therefore,India confronted with a shortage of liquidity because of its
decrease in foreign exchange reserves.Since 2010,India’s total foreign exchange
decreased to 176685.263 million SDR in 2012 from 179375.169million SDR although
its gold reserves was unchanged.One notable point is that India’s reserves position has been risen from
1548.352 millionSDR in 2010 to 2924.213 million SDR in 2012.The SDR holding
decreased to 2886.381 million in 2012 from 3297.068 million in
2010.The foreign exchange reserves has dwindled from 173902.125 million SDR in
2010 to 170247.046 millionSDR in 2012.Therefore,net result was the contraction
of international liquidity. The indirect effect was seen the falling external
value of Indian rupee although NEER and REER are directly related with the
value of Rupee as well as the India’s competitive position of share market is
to be considered carefully. However, India’s BOP has not been improved due to
shortage of international liquidity which was marginally better before the
inception of the financial crisis.
India’s reserves in million .
Reserves
|
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2009
|
2010
|
2011
|
2012
|
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Total Reserves
|
SDRs
|
169,782.067
|
179,375.169
|
177,329.731
|
176,685.263
|
Total Reserves Minus
Gold
|
SDRs
|
169,154.443
|
178,747.546
|
176,702.107
|
176,057.640
|
Gold
|
Fine Troy Ounces
|
17.932
|
17.932
|
17.932
|
17.932
|
Reserve Position in
the Fund
|
SDRs
|
912.065
|
1,548.352
|
2,555.377
|
2,924.213
|
SDR Holdings
|
SDRs
|
3,297.141
|
3,297.068
|
2,884.835
|
2,886.381
|
Foreign Exchange
|
SDRs
|
164,945.238
|
173,902.125
|
171,261.895
|
170,247.046
|
Source-IMF
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