India’s foreign exchange reserves position is comfortable in terms of import cover of more than 18 months and provides cushion against unforeseen external shocks.  This was stated by Union Minister of State for Finance Shri Pankaj Chaudhary in a written reply to a question in Rajya Sabha.

Weather the reserve funds are adequate to meet the international payment obligations, the Minister said that the ratio of forex reserves to total external debt stood at 101.2 per cent and short-term external debt to forex reserves stood at 17.5 per cent as at end-March 2021. The ratio of volatile capital flows (including cumulative portfolio inflows and outstanding short-term debt) to reserves was 67.0 per cent at end-December 2020. India is comfortable in most of the external sector vulnerability indicators.

Giving details of India’s foreign exchange reserves in last five years, the Minister tabled the following data:

India’s Foreign Exchange Reserves

Year	Foreign Exchange Reserves (US$ Billion)
2016-17	370.0
2017-18	424.5
2018-19	412.9
2019-20	477.8
2020-21	577.0
9th July 2021	611.9

Source: RBI

Speaking on the international currencies in our forex reserve, the Minister said the foreign currency assets, constituting more than 90 per cent of India’s forex reserves, are maintained as a multi-currency portfolio comprising major currencies, such as, US dollar, Euro, Pound sterling, Japanese yen, etc.

Foreign exchange reserves adequacy secures import cover and cushions against external shocks, supported by favourable vulnerability ratios. India's foreign exchange reserves provide an import cover of more than eighteen months and serve as a buffer against external shocks. External vulnerability metrics reported include a forex reserves to total external debt ratio of 101.2% and a short term external debt to reserves ratio of 17.5% at end March 2021, with volatile capital flows to reserves at 67.0% at end December 2020. Over 90% of reserves are held as foreign currency assets in a diversified multi currency portfolio of major international currencies.