India’s Forex Reserves Surpass $700 Billion Milestone

Why in the news?

Commerce Minister Piyush Goyal announced India’s forex reserves exceeding $700 billion, highlighting the nation’s economic growth and commitment to sustainable practices during the SHRM India Annual Conference 2024.

India's Forex Reserves Surpass $700 Billion Milestone

 About India’s Economic Growth and Forex Reserves:

  • Ministerial Announcement: Commerce and Industry Minister Piyush Goyal announced that India’s foreign exchange reserves have exceeded $700 billion.
  • Global Perspective: Goyal highlighted India’s transformation from a fragile economy to one that is now a trusted partner for nations worldwide, with increasing interest in expanding economic relations.

Emphasis on Circular Economy:

  • Circular Economy Commitment: Goyal reiterated India’s commitment to a circular economy, emphasising its importance in sustainable development.
  • Global Leadership: He stated that India has become a respected leader in this area, inspiring other nations to follow suit.

Collective Action for Sustainability:

  • Call for Collaboration: The Minister urged global cooperation to address pressing challenges such as climate change.
  • Sustainable Future Vision: Goyal emphasised the necessity of working together to achieve sustainability and a healthier planet, reinforcing India’s role in the global dialogue on environmental issues.

What are Foreign Exchange Reserves?

  • Definition: Reserve assets held by a central bank in foreign currencies.
  • Composition: Includes foreign currencies, bonds, treasury bills, and government securities.
  • Custodian: Reserve Bank of India (RBI) manages India’s foreign exchange reserves.

Components of India’s Forex Reserves

  • Foreign Currency Assets (FCAs): Maintained in currencies like USD, euro, pound, AUD, and JPY.
  • Gold: A significant portion of reserves.
  • SDR (Special Drawing Rights): Reserve currency with the IMF.
  • RTP (Reserve Tranche Position): Reserve capital with the IMF.

Purpose of Forex Reserves

  • Backing Liabilities: Supports issued currency and monetary policy.
  • Stability: Provides backup if the national currency devalues.
  • Market Intervention: RBI sells dollars to check currency depreciation.
  • International Reputation: Strong reserves enhance a country’s image and attract foreign trade.

Sources Referred:

PIB, The Hindu, Indian Express,Hindustan Times