Foreign exchange reserves in India rise by over $4.48 billion

India’s foreign exchange reserves rose by $4.483 billion during the week ending Jan.1.

According to the Reserve Bank of India’s weekly statistical supplement, the reserves increased to $585.324 billion from $580.841 billion reported for the week ended December 25.

India’s foreign exchange (forex) reserves comprise of foreign currency assets (FCAs), gold reserves, special drawing rights (SDRs), and the country’s reserve position with the International Monetary Fund (IMF).

On a weekly basis, FCAs, the largest component of the forex reserves, edged higher by $4.168 billion to $541.642 billion.

Besides, the value of the country’s gold reserves increased by $315 million to $37.026 billion.

However, the SDR value remained flat at $1.510 billion.

Similarly, the country’s reserve position with the IMF remained static at $5.145 billion.

Meanwhile India’s first advance estimate of national income showed a contraction of 7.7 per cent in real GDP for FY21.

On a year-on-year basis, Asia’s third largest economy had grown by 4.2 per cent in 2019-20.

“Real GDP or GDP at Constant Prices (2011-12) in the year 2020-21 is likely to attain a level of Rs 134.40 lakh crore, as against the provisional estimate of GDP for the year 2019-20 of Rs 145.66 lakh crore, released on May 31, 2020,” the First Advance Estimates of National Income for financial year 2020-21 said.

“The growth in real GDP during 2020-21 is estimated at -7.7 per cent as compared to the growth rate of 4.2 per cent in 2019-20.”

As per the estimate, real GVA at basic prices is estimated at Rs 123.39 lakh crore in 2020-21, as against Rs 133.01 lakh crore in 2019-20, showing a contraction of 7.2 per cent.

Meanwhile the lockdown measures in some of the key export markets subdued India’s merchandise exports in December 2020 by 0.80 per cent to $26.89 billion from $27.11 billion in December 2019, preliminary data showed.

“India’s merchandise exports in December 2020 totalled $26.89 billion, compared with $27.11 billion in December 2019, a marginal fall of 0.80 per cent,” a Ministry of Commerce and Industry statement said on the basis of preliminary data.

“Exports during April-December 2020-21 were worth $200.55 billion, compared with $238.27 billion during the same period last year, exhibiting a negative growth of 15.8 per cent.”

Consequently, India’s trade deficit widened by 25.78 per cent to $15.71 billion in Decmber 2020 from $12.49 billion reported for the same period of the previous year.

However, in December 2020, the value of non-petroleum exports stood at $24.73 billion, registering a positive growth of 5.33 per cent on YoY basis.

Similarly, the value of non-petroleum and non-gems and jewellery exports in December 2020 stood at $22.15 billion compared with $21.06 billion in December 2019, registering a positive growth of 5.17 per cent. On the other hand, India’s merchandise imports grew by 7.6 per cent in December to $42.60 billion from $39.59 billion during the corresponding month of the previous year.

In December 2020, oil worth $9.61 billion was imported, compared with $10.72 billion in December 2019, a decline by 10.37 per cent.

“Non-oil imports in December 2020 totalled an estimated $33 billion, compared with $28.88 billion in December 2019, showing an increase of 14.27 per cent.”

“Non-oil, non-GJ (gold, silver & precious metals) worth $26.10 billion were imported in December 2020, recording a positive growth of 8.42 per cent, compared with non-oil and non-GJ imports totalling $24.07 billion in December 2019.”

“The sharp step up in the value of merchandise imports to $42.6 billion, widened India’s merchandise trade deficit to $15.7 billion, the highest level since November 2018,” said ICRA Principal Economist Aditi Nayar.

“The recovery in imports reinforces our expectation that the current account surplus will deflate to sub-$5 billion in H2 FY2021.”

EEPC India Chairman Mahesh Desai said while domestic economy is showing sure signs of bounce back, there is still a rough sail for exports in the global market.

“This is despite roll out of Covid 19 vaccine in several parts of the world,” said Desai.

According to FIEO President Sharad Kumar Saraf, December exports also signals that our traditional and labour-intensive sectors of exports have passed the most challenging and testing times as both Christmas and New Year Season sales have shown positive trends with further improvement in coming months.

Going ahead by this trend, we expect our inventories to be liquidated, adding further to the overall demand, observed Saraf.