Will the incident of 2013 happen again in India..??

As the economies of Sri Lanka, pakistan and bangladesh are falling down in South Asian countries one after the other, if india is the only one without any problems..? The indian economy is also facing some headwinds. India's foreign exchange reserves have declined by 11 percent from their historical highs. India's total foreign exchange reserves declined to $573 billion from $642 billion in October.
In addition, the indian rupee is still hovering around Rs 80 against the US dollar despite the bank OF INDIA' target='_blank' title='reserve bank of india-Latest Updates, Photos, Videos are a click away, CLICK NOW'>reserve bank of india raising its benchmark repo rate twice. To deal with this situation, the question arises whether the same incident that happened in 2013 will happen again.After the 2008 economic and financial crisis, the indian economy was slowly growing and there was an excess demand for dollars in the indian trading market. To meet this demand, then the Union Finance Ministry and the bank OF INDIA' target='_blank' title='reserve bank of india-Latest Updates, Photos, Videos are a click away, CLICK NOW'>reserve bank of india jointly seized the dollar instead of buying it directly.In mid-2013 there was excess dollar demand in india, Indonesia, Brazil, Turkey, and South Africa. The crisis was memorable when Morgan Stanley named it the Fragile Five economies. It was in this situation that the central government seized the dollar with the help of NRIs due to the devaluation of the country's rupee.NRIs have been a strong supporter of india then and now, and in 2013 there was a huge call for overseas indians to deposit in dollar currency. The special feature of this scheme is not only the attractive interest rate but also the withdrawal of money in rupees while completing the deposit.
And NRIs see this as an additional business opportunity for foreign banks as they get loans from foreign banks at cheap interest rates and deposit them in indian banks. With this, the indian government managed a multi-billion dollar reserve and met its dollar demand, India's scheme is still praised by many economists today.And since the central government gets money in this way, it can avoid borrowing it, while the government can spend as it likes without any restrictions. In today's situation, despite the outflow of foreign investments, the value of the rupee continues to remain at 80. Thus the Reserve bank may implement the 2013 plan to contain the recession, but there is still time for this. So there are chances that RBI governor Shaktikanta Das plans Plan B.

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will same incident like 2013 happen again

Sowmiya Sriram

28/07/2022 08:55 PM