He also said the Reserve Bank of India‘s successful mobilisation of FCNR (B) deposits has lent “very strong” support to India’s balance of payments, and also provides a floor to the domestic currency against the US dollar. “RBI’s successful mobilisation of FCNR deposits lends a very strong level of support for the balance of payments and also provides a floor on the Indian rupee vis-a-vis the United States dollar,” Nageswaran said after the release of the first quarter GDP data.
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The RBI introduced the USD-INR Forex Swap facility covering FCNR(B) deposits, ECBs and OFCB inflows on June 8 to strengthen India’s external sector position and support foreign exchange liquidity amid global market uncertainties. Highlighting “continued resilience” in India’s growth performance, he said: “In the near term, the domestic economic momentum is very strong, but globally, we are continuing to see uncertainties. We have flagged it in the Economic Review for August. There is concern with respect to the level of interest rates and potential disruptions on energy commodity supplies and also what will happen to the food prices, etc”.
Nageswaran says RBI’s mobilisation of FCNR (B) deposits helped balance of payments, provides floor to Re against $
Nageswaran explained that there are multiple issues that are still in the air as far as global affairs are concerned. “And at some point, they may have an impact on economic activity in the country. But as of now, the domestic momentum and export performance have both combined to deliver another quarter of very strong growth, vindicating the beneficial effects of macroeconomic structural reforms that have been implemented over the last 12 years,” he said.
The CEA said the country is now reaping the benefits of the structural reforms in a very uncertain global environment. India’s economy grew 7.8% in the April-June quarter.
He also said all three sectors, primary, secondary and tertiary, have contributed to the GDP growth in the first quarter of the fiscal. “All three sectors have contributed; agriculture slightly less so, but we have manufacturing and services doing quite well in the first quarter in general despite the West Asia-related uncertainties ,” he said.