India’s reserves-comprising major currencies, gold special drawing rights and reserves with the International Monetary Fund (IMF)-have been rising steadily since 2013, when the country was part of the “fragile five” category and foreign investors exited because of weak macroeconomic fundamentals.
Today, only China, Japan and Switzerland hold higher reserves than India. An analysis of June end data of standard reserve adequacy measures shows India is in the middle of the pack.
AgenciesIn terms of the ability of the reserves to finance the country’s imports or import cover of reserves, India’s reserves were adequate to fund 11.9 months’ imports-way above the norm which is considered to be six months-as of June end.
But some of its peers like Brazil and Russia were doing still better, with 17.8 months’ cover and 25.7 months’ cover, respectively.
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As a percentage of GDP, India’s reserves were at 19%. Countries like Thailand, Malaysia and South Korea had a higher share of reserves in their respective GDP. Even in terms of other matrices like reserves to money supply and short-term external debt coverage, India was placed comfortably though there were countries doing better.
