Economic Survey: India's forex reserves helped tide over global crisis

New Delhi: The Economic Survey on Friday said it was India's foreign exchange reserves, the fourth largest in the world, which helped it tide over the global financial crisis .

India's foreign exchange reserves touched $297.3bn in December 2010 from $279.1bn in March.

"It needs to be acknowledged that foreign exchange reserves have helped insulate India from the worst impact of the crisis," the survey said.

The three nations with larger foreign exchange reserves than India are Japan, with $ 1.12 trillion, Russia with $479.4 billion and China with the world's largest hoard of $2.45 trillion as of June 2010.

According to the Survey, the country's reserves mainly comprise portfolio investment (FII), "…which are more vulnerable to sudden stops and reversals and borrowings from abroad".

India's foreign exchange reserves have increased over the years from a mere $5.8 billion in March 1991 to $314.6 billion in May 2008. However, the reserves had declined to $252 billion a year later, by the end of March 2009.

"The decline in reserves in 2008-09 was, inter alia, a fallout of the global crisis and strengthening of US dollar vis-a-vis other international currencies," the Survey said.