IMF Current Affairs - 2020

Forex Reserves of India are rising

The Forex Reserves of India are increasing and are to hit 500 billion USD soon. In May 2020, the Indian Forex Reserves touched an all time high of 493 billion USD.

What is Foreign Exchange Reserve?

The Foreign Exchange Reserves are the reserve assets that are held by the central bank in foreign currencies. It is used to back the liabilities faced by a currency due to the influence of monetary policy.

Why are the Forex Reserves rising?

The Forex Reserves of India are increasing mainly due to fall in crude oil prices. Also, the rise is because of the increase in investment in Foreign Direct Investments (FDI) and Foreign Portfolio Investors (FPI).

Significance

The Forex Reserves are held by the GoI to maintain liquidity in the country. It also helps to absorb shocks where access to borrowing is curtailed. The Forex Reserves are an important component of Balance of Payment and also an essential element to analyze the external position of the economy.

Components of Foreign Reserves of India

The Foreign Exchange Reserve of India comprises of the following

  • SDR (Special Drawing Rights) in International Monetary Fund. The SDR is the reserve Currency with IMF
  • Gold
  • RTP: RTP is Reserve Tranche Position in International Monetary Fund. It is the reserve capital with International Monetary Fund.

Portal GARUD launched by DGCA

The Directorate General of Civil Aviation (DGCA) operating under Ministry of Civil Aviation launched “GARUD” Portal. GARUD is Government Authorisation for Relief Using Drones.

Highlights

The GARUD portal will assist state entities to obtain exemptions from central government to operate drones for COVID-19 purposes. The portal is important as several state entities are deploying drones to disinfect public places. Especially, the smart cities are employing drones to spray disinfectants on the roads and other public places.

Start Ups

Several startups in India are coming up with new technologies using drones to spray disinfectants and sanitizers. For instance, the Garuda Aerospace startup has invented “Corona Killer” drone to spray disinfectants on buildings that are 450 feet high.

At this stage, while Indian Economy is declining at faster rate due to the COVID-19 and lock down, it is essential to keep up such startups. These startups will not only help in fighting the virus, but will also help in reviving the growth of the economy.

Growth Rate

Several World Financial Organizations have projected declining growth rate of India. The World Bank expects Indian economy to grow at 1.5% to 2.8%. The IMF predicted growth rate of the country to be 1.9%. The Fitch ratings cut India’s growth rate to 2%.