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Reserves: The RARE model in India

'The fiscal situation in India is quite weak, which is why the international ratings of the Indian sovereign are consistently very low', says the author

Forex reserves
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Gurbachan Singh
The foreign exchange reserves (hereafter, reserves) in India are close to $620 billion. On July 28, a parliamentary panel and then on August 11, the Union Minister Nitin Gadkari, observed that the Reserve Bank of India (RBI) is possibly holding excessive reserves. Is this recent view on a long-term issue correct? 

It appears that we have had, what I may call, the RARE model of reserves in India. The acronym RARE stands for Reserves for Atmanirbharta, Ratings, and Exchange rate stability. The first two of the three objectives are not explicit; only the third is. Let us consider these one by
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper

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