India’s forex reserves down to 7-month import cover

India's foreign reserves came down to $294.4 billion at March 2012 from $311.5 billion at September 2011 end mainly due to RBI's intervention in the domestic foreign exchange market and effect of revaluation

Mumbai: India's foreign exchange reserves came down to $294.5 billion as on March 2012, enough to cover imports of seven months, as against eight-and-half months about six months ago, reports PTI.
The reserves -- a parameter to gauge a country's ability to absorb external shocks -- came down to $294.4 billion at end-March from $311.5 billion at September 2011 end mainly due to "intervention in the domestic foreign exchange market and effect of revaluation," a RBI report said.
"At the end of March 2012, the import cover declined to 7.1 months from 8.5 months at end-September 2011," said RBI's 'Half Yearly Report on Management of Foreign Exchange Reserves: October 2011 March 2012'.
India's import bill was $37.9 billion in July 2012.
Import cover refers to the number of months of imports that could be paid for from the foreign exchange reserves -- an important parameter in gauging a nation's ability to absorb external shocks.
With the changing profile of capital flows, traditional approach of assessing reserve adequacy in terms of import cover has been broadened to include a number of parameters, the RBI said.
As per the report, the ratio of short-term debt to the foreign exchange reserves which was 23.0% at end-September increased to 26.6% at end-March 2012.
Also, the ratio of volatile capital flows (defined to include cumulative portfolio inflows and short-term debt) to the reserves increased from 68.3% as on end-September 2011 to 79.9% as at end-March 2012.
RBI further said the rate of earnings on foreign currency assets and gold decreased from 2.09% in July 2009-June 2010 to 1.74% in July 2010-June 2011, "reflecting the generally low global interest rate environment".
As at end-March 2012, the RBI said out of the total foreign currency assets of $260.1 billion, $140.3 billion was invested in securities and $114.3 billion was deposited with other central banks, BIS and the IMF.
The rest ($5.5 billion) comprised deposits with foreign commercial banks and funds placed with the External Asset Managers.
The report also said the RBI held 557.75 tonnes of gold forming about 9.2% of the total foreign exchange reserves in value terms as on March 2012.
Of these, 265.49 tonnes are held abroad in deposits/safe custody with the Bank of England and the Bank for International Settlements.
The foreign exchange reserves consists of major currencies such as US dollar, Euro, Pound Sterling and Japanese Yen.


Sutlej Jal Vidyut to execute two 1,170-MW projects in Bhutan

State-run Sutlej Jal Vidyut will execute two hydro power projects, 600 MW Kholongchu HEP and 570 MW Wangchu HEP, in Bhutan in collaboration with Druk Green Power Corp

Shimla: State-owned Sutlej Jal Vidyut Nigam (SJVN) said it will execute two hydro power projects, namely 600 MW Kholongchu HEP and 570 MW Wangchu HEP in Bhutan in joint venture with Druk Green Power Corporation of Bhutan, reports PTI.
The DPR (Detailed Project Report) of these projects have already been completed and submitted to the Central Electricity Authority for approval, SJVN Chairman and Managing Director RP Singh said.
Singh said SJVN had also submitted the pre-feasibility report for three projects in Arunachal Pradesh, namely 60 MW Rangarandi Stage-II, 378 MW Kameng-I and 80 MW Doimukh Projects in a record time of six months, to the government of Arunachal Pradesh.
The survey and investigation works on the Si-River basin in Arunachal Pradesh is in progress, he added.
During the current financial year, SJVN's Nathpa Jakhari Hydro Power Station achieved a Plant Availability Factor of 108 per cent as compared to 103 per cent during corresponding period of last year.
The plant targets to generate 7,000 million units of electricity and is close to achieving the target during the year.
He said with the final breakthrough in the HRT, the 412 MW Rampur HE Project is heading for completion and commissioning in September, 2013.
Company's diversification plans into Wind power are being realised with the 50 MW capacity plant scheduled to be completed during 2013, Singh added.


Needed a single window clearance to attract foreign investments

Foreign investors, who are wary of delays and uncertainties associated with project clearance, have reiterated their interest in participation in coal projects provided government sets up a workable single window clearance which works within a time frame
In the last few months Moneylife has extensively covered the ongoing problems relating to power generation, distribution and breakdowns. Poor and inadequate rains have added fuel to fire. Indigenous supply of coal is also insufficient but what is available at the pitheads, due to transport logistics, is not able to move fast.
Hundreds of proposals are stuck at the ministry of environment and forests (MoEF) or at state level on some ground or another.
What is really happening? Looks like nothing at all. And in any case, not at the speed at which the power-hungry aam aadmi’s needs or the way power generators conceived when they got into the projects in the first place. Also, some of them are equally guilty of not doing anything on the coal blocks offered to them earlier, on which nothing had been done for years.
Files are collecting dust and moving at a snail’s pace much to the discomfort of the public and projects attached to these schemes.
What should an enterprising investor do? Already, some leading power generators are smart and have had the wisdom and foresight to establish overseas supply sources. In fact, many of them have spent millions of dollars in buying and leasing mines in different countries such as Indonesia, Mozambique, South Africa and Australia. Others are now prospecting for supply sources in Russia and USA.
In a road-show organized by IDFC in Singapore, which was attended by a team lead by coal minister Sriprakash Jaiswal, the pulse of the foreign investors was they too would face the long delays and uncertainties associated with green clearance and land acquisition already faced by many Indian companies.
They have reiterated their interest in participation in such projects provided government moves in the direction to set up a workable single window clearance with a time frame. According to the information made available by Coal India, 133 of their proposals are pending at state levels and 45 at the MoEF, awaiting various types of clearances.
Even if a blanket clearance is given, hypothetically, it will take at least two to three years before commercial production can be achieved in various degrees in these sites mentioned above. Until then, Coal India has to continue its overseas purchases of 18-20 million tonnes of coal every year and try to manage and increase the indigenous production, tackle the issue of transport logistics and pray to avoid labour strikes in areas of contract labour associated with this industry.
The railway ministry, for reasons best known to them, have not made any dramatic announcements in regard to setting up dedicated corridors for facilitating coal movement, nor is it an overnight easy job to lay additional tracks alongside existing ones.
In the meantime, FSAs (fuel sales agreements) are still undergoing changes in regard to delivery commitments, compensation, import and indigenous product mix and uniform price levels.  Not an easy or enviable task for Coal India at the moment while the country suffers from inadequate power supply.
Time is the essence of contract and there should be no more delays in settling the FSA issue.

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected].)



Shadi Katyal

5 years ago

One wonders if anyone is standing in line to invest in India.Even the NRI like Mittal has walked away and so are others.
Window or no window unless we learn how the industry development is implicated without BABUS and RED TAPE, we will always be on the other end of begging bowel of the investors.
We keep killing initiative from inside like the RETROACTIVE TAX bill etc. Too many open hands for Bakhshhesh.Arrogance and rude behavior by officials.
Case of INTEL is an example and others are following INTEL to invest in Vietnam and leaving India behind. In next decade even Burma,Vietnam will develop more than India.
It is the bureaucratic and red tape plus ignorance of development of the rest of the world that is dragging India into becoming a third rate economy. We have to get ourselves out of this malice that we were great Civilisation etc. It is TODAY and TOMORROW which counts

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