MUMBAI: The Reserve Bank of India’s (RBI) war chest meant to protect the rupee depleted further and the pressure on government finances persisted throughout last week. According to data released by RBI, the forex reserves dipped by $165 mn during the week ended February 20 to $249.5 bn, largely due to the revaluation of non-dollar assets such as euro, sterling pound and the Japanese yen vis-a-vis the US dollar.
While foreign currency assets dipped by $165 mn, the value of gold and SDR — the currency with the IMF — remained unchanged. IMF’s reserves dipped by $9 mn during the week.
The government continues to rely on ways and means advances (WMA) to meet its revenue mismatches, reflecting weakening governmental finances. The centre borrowed an additional Rs 2,428 crore under the WMA scheme — a temporary overdraft facility the government enjoys with RBI — reflecting the weak financial situation.
The Centre’s outstanding WMA was Rs 17,820 crore as on February 20, up Rs 2,428 crore over the previous week. State governments have not taken any overdraft from the RBI. The annual money supply growth touched 19.9%. Going by the updated money supply figures, the total money in the system was Rs 36,039 crore on February 13.
While the public and term deposits rose by Rs 18,364 crore and Rs 32,591 crore, respectively, the demand deposits dipped by Rs 15,244 crore. At current levels, the annual growth in money supply is 19.9% lower than growth in the same period a year ago, but is still higher than the enhanced target of 19% envisaged during the January quarterly monetary policy review in January 2009.
Source : The Economic Times