India's import cover at a robust 12 months

Ratio of volatile capital flows to reserves declined from 87.1% in March 2016 to 85.8% in Sept 2016

India’s import cover improved substantially at the end of September last year, thanks to the build-up of reserves by the Reserve Bank of India (RBI).

At the end of September, the import cover increased to 12 months from 10.9 months at end-March 2016, RBI’s half-yearly report on management of foreign exchange reserves showed.

Back in 2012, the country’ import cover had dropped to about seven months. About eight months of import cover is considered healthy.

The report released by RBI showed ratio of short-term debt to foreign exchange reserves, which was 23.1 per cent at end-March 2016, declined to 21.8