India’s external pressures persist despite forex swap inflows, says Nageswaran

Mumbai: India's balance of payments pressures are likely to persist despite a surge in foreign currency inflows through the Reserve Bank of India's special swap window, chief economic advisor V Anantha Nageswaran said on Thursday, warning that increasing imports, higher global interest rates and intensifying competition for foreign capital could strain the external account.

The RBI's concessional forex swap programme has provided India with significant near-term room to manage external pressures, but it should not be viewed as a permanent solution, Nageswaran said at the State Bank of India (SBI) Banking and Economics Conclave in Mumbai.

Inflows through the facility, which covers Foreign Currency Non-Resident (Bank) deposits, overseas foreign currency borrowings and external commercial borrowings, had crossed $143.5 billion as of September 18. The inflows could help India record a balance of payments surplus of about $100 billion in this financial year, compared with a $23 billion deficit last year.