Can Indian Economy Avert Crash Landing in 2011?

[aakash_2410]

Oh my god!
Ignorance is at the peak!
Riaz Haq's version:-
India's economy sucks! It's deascreasing at the rate of 9% and will be world's second smallest economy by 2050.
Goldman Sach's [world's most UNPOPULAR and STUPID economist] version:-
India's economy is predicted to overtake u.s's economy to become world's second largest economy by 2050.

 

[Imran Khan]

Can Indian Economy Avert Crash Landing in 2011?

answer is why you need it? is its benefit of you or pakistan i dont think so .

 

[Jade]

How about using the latest quotes and opinions of Stiglitz and Goldman Sachs that are relevant to the current situation?

Here are some:

Joseph Stiglitz, the Columbia University economist, argued that India is more vulnerable to an asset bubble than China, saying that “strong economies that don’t yet have capital control become the focal point” for the liquidity injected the US Federal Reserve.

Asia markets wrap: stocks down; Stiglitz more worried about India than China | beyondbrics | News and views on emerging markets from the Financial Times ? FT.com

"Nearly 80 per cent of the capital inflows are non- FDI related. Given the excess spare capacity globally, FDI may remain weak going forward," the (Goldman-Sachs) note said.

Rising imports due to strong domestic demand and concerns that exports growth may be slow could add to the widening current account gap problem, it said.

India's current account deficit widened sharply to $13.7 billion in the June-quarter, which was around 3.7 per cent of GDP. The deficit was $4.5 billion in the same period year ago.

India's current account deficit may widen to a record: Goldman - The Economic Times

It is ridiculous to say that India has no capital control. Even now India is one of the toughest markets to do business. The following is a part of an article published in the Economist criticizing on the excessive capital control in India

Many emerging economies are reluctant to impose such controls. They fear such an infringement on economic freedoms will cast doubt on their commitment to market-friendly policies. Brazil seems almost apologetic about its taxes, which it insists are meant only to prevent excesses. India, by contrast, is less bashful about these things. It is proud of its “carefully calibrated” easing of capital restrictions over the past 18 years. It has no need to impose a tax on foreign investment in bonds, because such purchases are still banned beyond a fixed amount. Indian firms can raise money abroad, but the RBI sets limits on the amounts, rates and purposes of this borrowing. Foreign-direct investment (FDI) is welcomed enthusiastically, except in some industries, where it is spurned as an alien intrusion on the Indian way of life.

As on current account gap problem, I already replied to you on why it is not a serious problem in one of my previous posts. So I am not going to reply to this again

 

[Storm Force]

Just read today Chinease Inflation is reaching 8% they may have to push up interest rates

I BET RIAZHAQ will not say a crash is ready in CHINA.. will he !!!!

FT.com / China / Economy & Trade - China inflation surges to 25-month high

 

[Storm Force]

Come on RIAZHAQ

So looks like both of the worlds fastest growing economys are both over heating

Give is prediction of gloom doom my friend LOL

 

[RiazHaq]

It is ridiculous to say that India has no capital control. Even now India is one of the toughest markets to do business. The following is a part of an article published in the Economist criticizing on the excessive capital control in India

Many emerging economies are reluctant to impose such controls. They fear such an infringement on economic freedoms will cast doubt on their commitment to market-friendly policies. Brazil seems almost apologetic about its taxes, which it insists are meant only to prevent excesses. India, by contrast, is less bashful about these things. It is proud of its “carefully calibrated” easing of capital restrictions over the past 18 years. It has no need to impose a tax on foreign investment in bonds, because such purchases are still banned beyond a fixed amount. Indian firms can raise money abroad, but the RBI sets limits on the amounts, rates and purposes of this borrowing. Foreign-direct investment (FDI) is welcomed enthusiastically, except in some industries, where it is spurned as an alien intrusion on the Indian way of life.

As on current account gap problem, I already replied to you on why it is not a serious problem in one of my previous posts. So I am not going to reply to this again

India, more than China or Brazil, should watch out for the tidal wave of money made available from the Fed’s quantitative easing, according to Nobel prize-winning economist Joseph Stiglitz.

China and Brazil have recently further restricted the ability of investors to move money in and out of those countries in recent weeks. India also has such regulations, known as capital controls. But it hasn’t been tightening them lately and hasn’t been intervening much in currency markets, allowing the rupee to rise about 5% this year against the dollar. Mr. Stiglitz thinks those factors will make India a target for investors looking for a quick buck.

“I do worry about countries like India where they are debating how much intervention in the market they should have,” he said Thursday in Hong Kong. “The free capital can go to fewer and fewer places, and India’s one of those,” he said.

Speaking more generally, he said: “Strong economies that don’t yet have those capital controls become the focal point for all this loose money and they will be the countries under a lot of stress.”

The trouble of course with such “hot money” is that it leaves the country just as quickly as it came in, whipsawing financial markets and destabilizing businesses, as in the Asian financial crisis of the late 1990s.

Mr. Stiglitz was speaking at the Mipim Asia real estate conference.

Stiglitz: India Could Lose in Capital Controls Race - India Real Time - WSJ

 

[RiazHaq]

Just read today Chinease Inflation is reaching 8% they may have to push up interest rates

I BET RIAZHAQ will not say a crash is ready in CHINA.. will he !!!!

FT.com / China / Economy & Trade - China inflation surges to 25-month high

India's inflation rate is much higher than China's.

And, unlike China's, India's vital stats are bad, and getting worse!

So Indian economy is more vulnerabe than China's.

Read more at:

Haq's Musings: Indian Economy: Hard or Soft Landing in 2011?

 

[Storm Force]

RIAZHAQ.

Do you enjoy reading about the worlds BIG ECONOMIES ie over $trillion +

ie Brazil India Russia China = BRICS nations i see

 

[Trichy]

India's inflation rate is much higher than China's.

And, unlike China's, India's vital stats are bad, and getting worse!

So Indian economy is more vulnerabe than China's.

Read more at:

Haq's Musings: Indian Economy: Hard or Soft Landing in 2011?

Thanks for your concern i may speak to Pranab about you & your thoughts, b'cos he is such a stupid to be a FM...

Happy

 

[Hutchroy]

Working with IMF

Safiya Aftab

Will the 2008 Stand-by Agreement be completed successfully over the next nine months? It's fairly clear that the main sticking point hindering the completion of the fifth review is the implementation of the RGST

Weighted contribution to overall inflation (yearly), SBP Inlfation Monitor 2010

The country’s exchequer badly needs that injection of $3.6 billion that the IMF is withholding. Without it, the government will resort to further borrowing from the State Bank, which will increase inflation

The new year has dawned with a new set of crises in Pakistan, and once again there is a danger that attention will deflect from the economic issues that continue to plague the country. It is therefore a good time to recap and see where we stand.

Two years after the government entered into a Stand-by Agreement (SBA) with the IMF, the Fund’s representative gave a somewhat depressing account of progress on the Agreement in the Pakistan Development Forum held in November 2010. As he pointed out, even prior to the floods of August 2010, the government had ended the last fiscal year having overshot the target on the fiscal deficit as well the ceiling on borrowing from the State Bank. Inflation continued to be high, although it had come down from the record levels of FY2009. Things, in short, did not look too good although the growth rate was recorded at over 4 percent.

Then the floods struck. The costing exercise done by the international financial institutions (IFIs) estimated the damage at close to $10 billion, or a third of the value of the federal budget. But the impact of the floods goes far beyond reconstruction costs. The loss to infrastructure and agricultural livelihoods is hard to recoup in the short term, and target growth rates for the current fiscal year have been toned down to below 3.5 percent. The fiscal deficit target has been revised up to 4.7 percent, given the expected tax revenue shortfalls and the need to make greater outlays for humanitarian assistance and reconstruction.

Pakistan is obviously unlikely to be able to complete the 2008 SBA on schedule. The fifth and sixth reviews of the Agreement have not even been held (the fifth review was supposed to be completed by September 2010). As things stand now, the government has asked for (and the IMF has agreed to) the Agreement being extended to September 2011. Essentially, the government is still looking to access two tranches of about $1.8 billion each (or SDR 1.15 billion) over the next 9 months, under the 2008 SBA. Earlier, analysts had speculated that the government would be happy to scupper the present SBA and go for a new negotiation altogether. This doesn’t seem to be the case, and indeed one can understand why the government would be reluctant to negotiate a new loan at a time when the Fund holds all the aces in the deck.

So what are the chances that the 2008 SBA will be completed successfully over the next nine months (in that the two remaining tranches will be released)?

It’s fairly clear that the main sticking point hindering the completion of the fifth review is the implementation of the RGST. The 2008 SBA was fairly explicit about the need for such a tax, saying that: “Following the seminar in December 2008, the government will initiate a process to implement a full VAT with minimal exemptions, to be administered by the FBR. Draft legislation for the VAT is expected to be ready for public debate by end-2009.” The introduction of the VAT was part of an initiative to increase tax revenue by at least 3.5 percentage points of GDP over the medium term (till 2011), a key requirement of the SBA.

Most of 2009 went by without the government doing much on the introduction of the VAT, firefighting as it was on multiple fronts, not least the security situation which, in the first part of the year, was threatening to swing out of control. It was only after the completion of the Swat offensive that the government could take a breather and start sending out feelers on the new tax. Even then, it wasn’t until the new Finance Minister took over in May 2010 that the introduction of the VAT emerged as an issue.

The budget for FY2011 showed sales tax increasing from Rs 143.8 billion (revised estimate) in FY2010, to a projected Rs 328.6 billion in FY2011. This 229 percent increase was predicated on the imposition of a reformed sales tax from October 2010 which would significantly reduce existing exemptions, broaden the tax base and allow for input crediting – in effect act as a somewhat imperfect VAT or as close to VAT as possible in an economy which is still not fully documented.

The announcement of the intention to impose the RGST unleashed a storm of protest across the country, which the floods only served to amplify. The prospect of additional indirect taxation, at a time when the common man was already reeling from the biggest natural disaster to hit in a century, has made for a good rallying point for the opposition. All of a sudden, a government, which for all its faults seemed entrenched, showed a weak underbelly; which its opponents have been quick to expose. All of the opposition parties other than the ANP have basically declared their intention of opposing any attempt to impose RGST. In fact, the PML-N and more recently the MQM, have formally decided to sit on the opposition benches in protest against the government’s economic policy in general, and (in case of the PML-N) the imposition of RGST in particular (for the MQM the breaking point was apparently the increase in fuel prices as of 1 Jan).

Draft legislation for the reformed sales tax on goods was introduced in the National Assembly in November 2010, while legislation on the tax on services (which will accrue to the provinces) has yet to be tabled. It now seems unlikely that it the National Assembly will vote on the bill in the near future. As of the 2nd of Jan, the government has lost its majority in parliament, and can hardly take the risk of asking for a vote on a finance bill which has become a rallying point for the opposition.

So far so good. But where will we go from here?

The opposition may raise as much of a hue and cry as it likes, but it is hard to understand why it would want to remove the current government. Why would anyone want to be in the hot seat in Islamabad in the current situation? As far as the hard economic decisions are concerned, as Prime Minister Gilani put it, “if we don’t impose the RGST, our successors will have to,” (or words to that effect).

Yes, ideally the share of direct taxes on income, as opposed to indirect taxes on consumption, in the total tax revenue should increase substantially in the short to medium term. And if the RGST hullabulloo succeeds in stoking that debate, then all power to the ones making the ruckus. In the immediate future though, (the next one year), even a well-intentioned government will not be able to put the necessary machinery or legislation in place to impose new direct taxes, such as a tax on income from agriculture.

Meanwhile, the country’s exchequer badly needs that injection of $3.6 billion that the IMF is withholding. Without it, the government will only resort more and more to borrowing from the State Bank, which will add a far greater impetus to inflation than the imposition of RGST ever could.

The effects of this are already visible. Year on year inflation was 15.5 percent in November 2010 as opposed to 10.5 percent in November 2009. What is more worrying is the hike in food inflation, which, year on year, exceeded 20 percent in November 2010 according to the State Bank’s data. It’s not difficult to see where this is coming from. As of October 2010, the State Bank’s net claims on the central government stood at Rs 1.3 trillion; of which Rs 192 billion were added on just in the four months from July to October. In other words, the government is borrowing something like Rs 1.8 billion a day, probably just to keep the wheels of administration running (since the development budget has more or less been slashed).

It can’t really get much more dire than this. The RGST may indeed be a lesser evil.

The writer is an analyst with Strategic and Economic Policy Research (Pvt) Ltd

 

[RiazHaq]

India's prime minister has warned that the country's rapid economic growth is under "serious threat" from inflation, according to the BBC:

Manmohan Singh said getting inflation under control was a matter of urgency, raising the prospect of an eighth interest rate rise in under 12 months.

Emerging markets like India, where GDP growth is running at 8.5%, are helping to drive global economic recovery.

But Mr Singh said India's inflation rate of 8.4% - and food price inflation of 17% - was unsustainable.

"Inflation poses a serious threat to the growth momentum. Whatever be the cause, the fact remains that inflation is something which needs to be tackled with great urgency," he said.

Analysts believe that surging food and oil prices mean that India's central bank may have to raise interest rates before its next policy meeting, which is scheduled for 17 March.

India's stock market has fallen this year on fears that high inflation will scare off foreign investors.

Wages in India are also rising as workers demand pay that keeps up with the cost of living.

BBC News - India's economic growth under 'threat' from inflation

 

[RiazHaq]

Is India in coma? Is it a corrupt banana republic? asks Mohan Murti in an Op Ed in The Hindu:

A few days ago I was in a panel discussion on mergers and acquisitions in Frankfurt, Germany, organised by Euroforum and The Handelsblatt, one of the most prestigious newspapers in German-speaking Europe.

The other panellists were senior officials of two of the largest carmakers and two top insurance companies — all German multinationals operating in India.

The panel discussion was moderated by a professor from the esteemed European Business School. The hall had an audience that exceeded a hundred well-known European CEOs. I was the only Indian.

After the panel discussion, the floor was open for questions. That was when my “moment of truth” turned into an hour of shame, embarrassment — when the participants fired questions and made remarks on their experiences with the evil of corruption in India.

The awkwardness and humiliation I went through reminded of The Moment of Truth, the popular Anglo-American game. The more questions I answered truthfully, the more the questions get tougher. Tougher here means more embarrassing.

European disquiet

Questions ranged from “Is your nation in a coma?”, the corruption in judiciary, the possible impeachment of a judge, the 2G scam and to the money parked illegally in tax havens.

It is a fact that the problem of corruption in India has assumed enormous and embarrassing proportions in recent years, although it has been with us for decades. The questions and the debate that followed in the panel discussion was indicative of the European disquiet. At the end of the Q&A session, I surmised Europeans perceive India to be at one of those junctures where tripping over the precipice cannot be ruled out.

Let me substantiate this further with what the European media has to say in recent days.

In a popular prime-time television discussion in Germany, the panellist, a member of the German Parliament quoting a blog said: “If all the scams of the last five years are added up, they are likely to rival and exceed the British colonial loot of India of about a trillion dollars.”

Banana Republic

One German business daily which wrote an editorial on India said: “India is becoming a Banana Republic instead of being an economic superpower. To get the cut motion designated out, assurances are made to political allays. Special treatment is promised at the expense of the people. So, Ms Mayawati who is Chief Minister of the most densely inhabited state, is calmed when an intelligence agency probe is scrapped. The multi-million dollars fodder scam by another former chief minister wielding enormous power is put in cold storage. Prime Minister Manmohan Singh chairs over this kind of unparalleled loot.”

An article in a French newspaper titled “Playing the Game, Indian Style” wrote: “Investigations into the shadowy financial deals of the Indian cricket league have revealed a web of transactions across tax havens like Switzerland, the Virgin Islands, Mauritius and Cyprus.” In the same article, the name of one Hassan Ali of Pune is mentioned as operating with his wife a one-billion-dollar illegal Swiss account with “sanction of the Indian regime”.

A third story narrated in the damaging article is that of the former chief minister of Jharkhand, Madhu Koda, who was reported to have funds in various tax havens that were partly used to buy mines in Liberia. “Unfortunately, the Indian public do not know the status of that enquiry,” the article concluded.

“In the nastiest business scam in Indian records (Satyam) the government adroitly covered up the political aspects of the swindle — predominantly involving real estate,” wrote an Austrian newspaper. “If the Indian Prime Minister knows nothing about these scandals, he is ignorant of ground realities and does not deserve to be Prime Minister. If he does, is he a collaborator in crime?”

The Telegraph of the UK reported the 2G scam saying: “Naturally, India's elephantine legal system will ensure culpability, is delayed.”

Blinded by wealth

This seems true. In the European mind, caricature of a typical Indian encompasses qualities of falsification, telling lies, being fraudulent, dishonest, corrupt, arrogant, boastful, speaking loudly and bothering others in public places or, while travelling, swindling when the slightest of opportunity arises and spreading rumours about others. The list is truly incessant.

My father, who is 81 years old, is utterly frustrated, shocked and disgruntled with whatever is happening and said in a recent discussion that our country's motto should truly be Asatyameva Jayete.

Europeans believe that Indian leaders in politics and business are so blissfully blinded by the new, sometimes ill-gotten, wealth and deceit that they are living in defiance, insolence and denial to comprehend that the day will come, sooner than later, when the have-nots would hit the streets.

In a way, it seems to have already started with the monstrous and grotesque acts of the Maoists. And, when that rot occurs, not one political turncoat will escape being lynched.

The drumbeats for these rebellions are going to get louder and louder as our leaders refuse to listen to the voices of the people. Eventually, it will lead to a revolution that will spill to streets across the whole of India, I fear.

Perhaps we are the architects of our own misfortune. It is our sab chalta hai (everything goes) attitude that has allowed people to mislead us with impunity. No wonder Aesop said. “We hang the petty thieves and appoint the great ones to high office.”

The Hindu Business Line : Is the nation in a coma?

 

[RiazHaq]

GENEVA: Global foreign direct investment (FDI) flows into India dropped by over 31 per cent in 2010 despite robust economic growth, according to the United Nations Conference on Trade and Development (UNCTAD).

However, China and other countries in South-East Asia continued to witness massive FDI flows, UNCTAD said in its Global Investment Trends Monitor report issued on Monday.

UNCTAD says global FDI flows remained almost stagnant in 2010, increasing by 1 per cent to USD 1.122 trillion.

UNCTAD forecasts that global FDI flows are likely to remain between USD 1.3 trillion and USD 1.5 trillion in 2011.

FDI inflows into India amounted to just USD 23.7 billion last year, as against USD 34.6 billion in 2009. "In India, we have seen a sharp decline and we can't explain why this has happened," said the UNCTAD's investment and enterprise division chief, James X Zhan, who prepared the investment report.

"We don't have the analysis," he said, maintaining that the decline in global FDI flows into India was based on the figures compiled by the central bank.

However, in sharp contrast, China received FDI worth USD 274.6 billion last year, compared to USD 233 billion in 2009. There is a "structural change," Zhan said in regard to the higher FDI flows to China, which is receiving huge investments on services and research and development activities.

Many Western companies have shifted their research facilities to China and there is rapid development in the hinterlands of the Communist country as well.

The sharp increase in global FDI flows to East and South-East Asian countries and Latin American nations in 2010 marked the first time that developing countries outpaced rich nations in attracting foreign investments.

China, Hong Kong and other South-East Asian countries like Indonesia, Malaysia, Singapore and Thailand were the main beneficiaries of the heightened FDI flows in the form of mergers and acquisitions (M&As) and greenfield investment.

Part of the reason for the stagnant investment flows the world-over was largely due to the poor performance of the developed economies, especially European countries, which were the worst-hit by the global financial turmoil.

The United States, which was the epicentre of the global economic meltdown in 2008, is gradually recovering from the crisis, with FDI flows increasing by 40% last year to USD 186.1 billion from USD 129.9 billion in 2009.

"The quarterly fluctuations during 2010 indicate that the worldwide FDI recovery is still hesitant," said the report.

Several risk factors such as the slow global economic recovery, investment protectionism, rising sovereign debt and continued volatility in the currency markets are likely to slow down the pace of foreign direct investment across the globe in 2011, it said.


Read more: Global FDI flows to India down 31% in 2010: UNCTAD - The Times of India Global FDI flows to India down 31% in 2010: UNCTAD - The Times of India

---------- Post added at 10:42 AM ---------- Previous post was at 10:41 AM ----------

Mumbai, Dec. 31 Year 2010 saw foreign institutional investors buy Indian stocks for $29 billion net. This is the most that they have pumped into the Indian market in a single year despite the market-indices here being fairly range-bound during this period.

This is also much more than the inflows ($17.6 billion) seen in 2007, when the Sensex was on a gaining streak.

The markets did surge a little in 2009, too, when FIIs were net buyers for a total of $17.45 billion.

Domestic institutions, on the other hand, were net sellers of equities for Rs 19,503 crore in calendar 2010.

FIIs were also net buyers in equities in all months this calendar, except in January and May. August saw the highest net purchases in a single month this year for $13 billion.

On a year-to-date-basis, the Sensex and the Nifty returned 15 per cent and 16 per cent, respectively.

It was this relentless buying from the FIIs that pushed up the Indian markets in 2010.

Though the Sensex did reach an all-time high this year, it was quite range-bound. The benchmark has been trading between 17,000 points and 21,000 points right through 2010.

Over-valued

The buying spree on the part of FIIs slowed down in the last month amidst all the scams and the routine FII year-end exits when they need to pay their investors. Their net purchases during December has so far amounted to $0.3 billion only.

“Part of this pullback is because India is perceived to be overvalued vis-a-vis other emerging markets.

“Indian markets have enjoyed around a 30 per cent premium to the other emerging markets. But what has happened this year is that the scams have made FIIs start to question the rich valuations here,” said Mr Saurabh Mukherjea, Head of Equity at Ambit Capital. He added that the next year might see a moderation in FII inflows into the country.

Domestic institutions were net buyers of equity during December and November after being net sellers for five consecutive weeks. Mr Mukherjea said that insurance companies have been seeing inflows trickling in during December and that the fund houses here are also in “slightly better health”.

Mr K. Ramanathan, Chief Investment Officer at ING Investment Management, said that mutual funds faced a lot of redemptions this year and they did not get much incremental net inflows.

“The changes in the regulatory framework too hurt the mutual fund industry. Distributors find it better to sell insurance products as the brokerage there is better than from distribution of mutual funds,” he added.

The Hindu Business Line : FIIs were key growth drivers of Indian markets in 2010

 

[CardSharp]

Just saw the head of JP Morgan India say the goal of 9% for 2011 is unrealistic. He said something about a combination of industrial slow, inflation, and rising gas/recently end petro-subsidies is likely to affect growth. He also said he remains optimistic about long term prospects.

He also predicts inflation to be in the neighbourhood of 8-9%

 

[RiazHaq]

Hot money inflows now account for 58% of India's forex reserves, reports The Financial Express.

The ratio of volatile capital flows—defined to include cumulative portfolio inflows and short-term debt—to the country’s forex reserves increased to 58.1% in March 2010 compared to last year’s 47.9%.

According to the Reserve Bank of India (RBI), the ratio of short-term debt to the foreign exchange reserves declined from 146.5% in March 1991 to 12.5% in March 2005, but increased slightly to 12.9% in 2006.

However, with expansion in the coverage of short-term debt, the ratio increased to 14.8% in March 2008, to 17.2% in March 2009 and 18.8% in March 2010.

The country’s foreign currency assets are invested in multi-currency, multi-asset portfolios as per the existing norms which are similar to the best international practices followed in this regard. At end of March 2010, out of the total foreign currency assets of $ 254.7 billion, $ 132.1 billion was invested in securities, $ 117.5 billion was deposited with other central banks, BIS and the International Monetary Funds (IMF) and $ 5.1 billion was placed with the External Asset Managers (EAMs).

A small portion of the reserves has been assigned to the EAMs with the main objective of gaining access to and deriving benefits from their expertise and market research, said RBI.

The rate of earnings on foreign currency assets and gold, after accounting for depreciation, decreased from 4.82% in July 2007-June 2008 to 4.16% in July 2008-June 2009.

The RBI held 557.75 tonne of gold forming about 6.0%of the total foreign exchange reserves in value terms as at the end of March 2010.

Of these, 265.49 tonne are held abroad (65.49 tonne since 1991 and further 200 tonne since November 2009) in deposits / safe custody with the Bank of England and the Bank for International Settlements.

In November 2009, the RBI concluded the purchase of 200 metric tonne of gold from the IMF, under the IMF’s limited gold sales programme. The purchase was an official sector transaction and was executed over a two week period during October 19-30, 2009 at market-based prices. As a result of this purchase, the RBI’s gold holdings have increased from 357.75 tonne to 557.75 tonne.

Following the commitment made by India as part of the G-20 framework, the RBI has agreed to purchase SDR denominated notes from IMF up to $10 billion. As on March 31, 2010, $317.9 million was invested in notes of the IMF.

International Monetary Fund designated India as a creditor under its Financial Transaction Plan (FTP) in February 2003. During April 2009 to March 2010, SDR 130 million was made available to Romania, SDR 50 million to Sri Lanka and SDR 117.93 million to Belarus.

The total purchase transactions amounted to SDR 1194.16 million as at the end March 2010. India was included in repurchase transactions of the FTP since November 2005. There were no repurchase transactions during the half year ended March 2010.

The traditional trade-based indicator of reserve adequacy- import cover of reserves- which fell to a low of three weeks of imports at end-December 1990 reached a peak of 16.9 months of imports at the end of March 2004. At the end of March 2010, the import cover stands at 11.2 months.

Hot money rises to 58% of forex reserves