India has enough forex reserves to keep the rupee strong for 5-6 years, says Piyush Goyal

Union Commerce and Industry Minister Piyush Goyal on Friday (December 8) said India's current level of foreign exchange reserves and remittances are enough to keep the currency and economy strong for the next 5-6 years even at the current levels of Current Account Deficit (CAD) and trade deficit.

A country experiences a current account deficit when it exports less money to foreign entities than it imports from them. Typically, the primary contributor to a current account deficit is the trade deficit, which represents the difference between the total value of exported goods and the total value of imported goods.

For the April-June period of 2023, India's current account deficit narrowed to $9.2 billion or 1.1% of GDP. The current account deficit stood at $17.9 billion or 2.1% of GDP in the year-ago period. Coming to India's October 2023 trade deficit, it widened to $31.46 billion, compared to $26.31 billion in the same month last year.

As of December 1, 2023, India's foreign exchange reserves have experienced a notable increase, reaching a total of $604 billion. This achievement marks a significant milestone, surpassing the $600 billion mark after a gap of approximately four months. To provide context, in December 2019 before COVID-19, India's foreign exchange reserves stood at the $450-billion mark.

The Indian rupee's valuation against currencies of major trading partners has surged to a near two-year high on Reserve Bank of India (RBI) intervention and elevated domestic inflation. The central bank routinely engages in market interventions to manage liquidity, a process that may include the sale of dollars. The objective is to prevent a substantial depreciation of the rupee.

Assuring the industry that India will retaliate and stand up for what's right for its industry in the Carbon Border Adjustment Mechanism (CBAM), the Minister said that India is gaining confidence & understanding of its true standing as it looks to become the world's third largest economy in next few years.

Addressing FICCI's 96th Annual Convention in Delhi, the Minister urged businesses to not give bribes at any cost and rather become whistleblower to help the government completely eliminate corruption.

Stating that the election year 2024 would we critical for the country in terms of determining stability, he expressed hope for the ruling BJP-led Central government to mark a hattrick in power next year at the back of 3 recent victories in assembly elections.

Pointing out that countries as far as Peru and Chile are urging India to swiftly negotiate and sign FTAs, he said that many countries are aiming to trump the duration of the India-UAE FTA negotiations, which were concluded in a record 88 days.

While he said that BEST in Mumbai is aiming to make its transport operations profitable after electrification of the entire fleet, he added that EVs and better roads now facilitate the travel of a family of 4 or 5 people from Delhi to Mumbai within 12 hours in a cost less than $100.