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Earlier today, the Reserve Bank of India released the Balance of Payments (BoP) data for January-March 2014 on its website (www.rbi.org.in). On the basis of these data, the sources of variation in foreign exchange reserves during 2013-14 have been compiled.
Sources of Variation in Foreign Exchange Reserves: 2013-14
During 2013-14, there was an increase in the foreign exchange reserves. The sources of variation in the foreign exchange reserves are set out in Table 1.
Table 1: Sources of Variation to Foreign Exchange Reserves* | ||||
(US$ billion) | ||||
Items | 2012-13 | 2013-14 | ||
I. | Current Account Balance | -88.2 | -32.4 | |
II. | Capital Account (net) (a to f) | 92.0 | 47.9 | |
a. | Foreign Investment | 46.7 | 26.4 | |
of which: Foreign Direct Investment | 19.8 | 21.6 | ||
Portfolio Investment | 26.9 | 4.8 | ||
FII | 27.6 | 5.0 | ||
ADR/GDR | 0.2 | 0.02 | ||
b. | Banking Capital | 16.6 | 25.4 | |
Of which: NRI Deposits | 14.8 | 38.9 | ||
c. | Short term credit | 21.7 | -5.0 | |
d. | External Assistance | 1.0 | 1.0 | |
e. | External Commercial Borrowings | 8.5 | 11.8 | |
f. | Other items in capital account | -2.5 | -11.7 | |
III. | Valuation change | -6.2 | -3.3 | |
Total (I+II+III) @ | -2.4 | 12.2 | ||
*: Based on old format of BoP | ||||
On balance of payments basis (i.e., excluding valuation effects), the foreign exchange reserves increased by US$ 15.5 billion during 2013-14 as compared to an increase of US$ 3.8 billion during 2012-13. The foreign exchange reserves in nominal terms (including the valuation effects) increased by US$ 12.2 billion during 2013-14 as against a decline of US$ 2.4 billion during the same period of preceding year (Table 2).
Table 2: Comparative Position of Variation in Reserves | |||
(US$ billion) | |||
Items | 2012-13 | 2013-14 | |
1 | Change in Foreign Exchange Reserves | -2.4 | 12.2 |
2 | Valuation Effects | -6.2 | -3.3 |
3 | Change in Foreign Exchange Reserves on BoP basis | 3.8 | 15.5 |
Note: Increase in reserves (+)/Decrease in reserves (-). | |||
The valuation loss, reflecting the cross currency movements and the decline in gold prices, amounted to US$ 3.3 billion during 2013-14 as compared to a valuation loss of US$ 6.2 billion in the previous year.
Alpana Killawala
Principal Chief General Manager
TaxTMI 
