India added $47.5 billion to forex reserves in FY23

India added $47.5 billion to foreign exchange reserves last fiscal year, down nearly half of the previous year. The data shows that nearly $26 billion of the incremental reserves were due to the sanction of Special Drawing Rights by the IMF and the revaluation of gold reserves. 4 billion worth hard foreign currency assets were added to the forex kitty after valuation losses. A $17.7 billion addition to the reserves was provided by the International Monetary Fund in terms of SDR allocation and close to $9 billion addition to the value of gold. Even excluding the SDR gains - which is a one-off $17.4 billion and changes in gold $8.67 billion - the gains in foreign currency assets are $20 billion. One way to interpret the moving parts is to see that gold reserve accretion has been high, so positive valuation effects were seen there, but then FCA related valuation losses are much higher than 17 bn, due to weaker euro, JPY and GBP in the last 12 months, said Rahul Bajoria, chief India economist at Barclays Capital. There are mainly movements in foreign currency assets due to the purchase and sale of foreign exchange by the RBI, income arising out of the deployment of foreign exchange reserves, external aid receipts of the Central Government and changes on account of the revaluation of the assets. Our external sector is strained without the support of the IMF. Madan Sabnavis, chief economist at, said that the current account is changing to deficit balance of payments. FPI is negative and FDI has retained its position. There is a weakness of the external account due to the slowdown in reserves, which assumes importance as central banks of advanced economies raise rates to fight rising inflation and the possibility of a wider current account deficit will put more pressure on the reserves and rupee. Estimates are that the current account deficit could go up to 3.0% of GDP in FY 23 or even higher from 1.2% in FY 22. A slowdown in global growth is expected to cause CAD to decline due to higher commodity prices, which is why we expect crude oil prices to average at 105 per barrel in FY 23. Export growth and services receipts are likely to be affected by a global growth slowdown. According to a report by the department of finance, we expect transfers to hold up in FY 23.