In 2008 when oil crossed $150 to a barrel and world economy tanked, India floated oil binds which were usurped by IMF and had windfall gains in 2016 when they became due. The present govt has paid all of them. No one will talk about it while the govt also managed to keep FD within 3% for this fiscal.
What happens when RBI creates forex reserves beyond the need? They are able to show to govt that their own reserves are low. Imagine if the money is not used to create the fores reserves then where will it be parked? It will be parked with RBI and RBI will have to share it with GOI. What Urjit Patel did was that he helped IMF and Fed to make money while denying to Indian Infra projects. There is a cost associated with creating reserves and the local economy must pay a price for it. If I have my say, I will recall about 25% forex reserves and also take away the 3.7lak core reserves of RBI to boost investment in Infra in India instead of begging UAE or Saudia for investments. Let us create a reverse brain drain and stop boosting dollar by buying them. We have been forced to go for local currency swap with Japan & UAE for what reason? Its due to wrong policies of RBI. Imagine if India and China which hold the largest reserve of dollars start withdrawing their investment in Dollars? what will happen to Dollar? it will lose its value rapidly.
Wouldn't be a bad time to re-look at dual -Citizenship for OCI/NRI bunch. If nothing a large influx of remittance will happen.
