India is unlikely to face an external financial crisis
Is India likely to face a financial crisis Forex Reserves: No doubt high level forex reserves has given the buffer to India to manage any external crisis arising out of maturing external liabilities/ repayment of interest/ principal towards external debt. The following evidences that: 1. Forex reserves, which was just 7% in 1991 (and was less than 50% till 2001) of the total external debt, now covers 97.8% of total external debt standing at USD 620.7 billion as on 31.03.2022 2. Current forex reserves is equivalent to cover 49% of total external liabilities (USD 1197.6 billion) and gives a great level of collateral comfort. 3. Forex reserves are also adequate to cover more than 10 months of imports, again a state of mental comfort. 4. High level forex reserves also played a major role in keeping the currency of the country, with a high current account deficit, within a range. Other comforting factors: However, it should be mentioned that there...