External debt in safe limits, export slowdown to continue

GN Bureau | February 26, 2016


#Economic Survey   #Budget Session   #Arun Jaitely  

The economic survey 2015-16 shows that the prudent external debt policy of the government has resulted in external debt remaining within safe and comfortable limits and in containing its rise. India’s balance of payments (BoP) position remained comfortable during the first half of 2015-16.  Low levels of current account deficit coupled with moderate rise in capital inflows resulted in rise in foreign exchange reserves of $10.6 billion in first half of 2015-16.  India’s foreign exchange reserves at $351.5 billion as on February 5, 2016 mainly comprised foreign currency assets equal to $328.4 billion (93.4% of the total) and gold at $17.7 billion. Between April 2015 and January 2016, the average exchange rate of the rupee depreciated to Rs 65.04 per US dollar as compared to Rs. 60.92 per US dollar in April 2014- January 2015.

The growth in India’s exports declined year on year by 17.6% and they stood at $217.7 billion. The imports have also declined by 15.5% in the current financial year to $324.5 billion US dollars.  Lower levels of Petroleum Oil Lubricants (POL) imports were the main reason for the decline in total imports this year so far.  As a result, the trade deficit decreased to $106.8 billion as compared to $119.6 billion in the corresponding period of 2014-15.  The economic survey further says that while exports slowdown may continue for a while before picking up in the next fiscal, continuance of low commodity prices globally augurs well for sustaining low trade and current account deficit.
 

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