FDI flow strong, FPI inflows improving, says RBI Governor Shaktikanta Das

Meanwhile, net inflows under nonresident deposits also increased to $3.6 billion during April-November 2022 from $2.6 billion a year ago, the RBI said. Foreign exchange reserves have rebounded from $524.5 billion on October 21, 2022 to $576.8 billion as on January 27, 2023 covering around 9.4 months of projected imports for 2022-23.

India’s debt 'low'

Das also asserted that India’s external debt ratios are low by international standards.

Substantiating his claims, he said India’s external debt to GDP ratio fell from 19.9 per cent in March 2022 to 19.2 per cent in September. The debt service ratio declined from 5.2 per cent in 2021-22 to 5 per cent in September 2022.

According to the revised budget estimates, external debt of India for FY23 is likely to be Rs 4.83 lakh crore, which is just 3.16 percent of total debt of Rs 152.61 lakh crore. The government expects the external debt to be 3.08 percent of the total debt in FY24.

Structural changes

In the last few years, the monetary policy stance of the central banks across the world has taken a sharp turn, highlighted Das in his speech. This calls for introspection, he suggested.

The unprecedented events of the last three years have put to test monetary policy frameworks globally. In a very short period, monetary policies across the world have veered from one extreme to the other in response to a series of overlapping shocks.

“In contrast to the Great Moderation era of the 1990s and the early years of this century, monetary policy was confronted with an unprecedented contraction in economic activity followed by a surge in global inflation,” said Das. “This calls for a deeper understanding of the structural changes in the global economy and inflation dynamics, and their implications for the conduct of monetary policy.”