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Q.3 Highlighting the factors affecting forex reserves, bring out the factors behind the recent decline in India’s forex reserves. (10 Marks)

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4 responses to “Q.3 Highlighting the factors affecting forex reserves, bring out the factors behind the recent decline in India’s forex reserves. (10 Marks)”

  1. Alankrit Srivastava Avatar
    Alankrit Srivastava

    Payment ID : #0000645504
    Staff @CD

    1. Staff @CD Avatar
      Staff @CD

      Alankrit

      Decent attempt, your knowledge is good.
      In introduction after giving the brief idea about forex reserves, you can talk a bit about the context of the question i.e. forex reserves in India are declining (fallen by $110 billion in the last 13 months).
      Few points about importance of forex reserves can be mentioned after that (but in very brief).
      Factors affecting forex reserves are fine, further you can talk about FPI/FDI inflows which help to build it. Ease of debt servicing is a consequence of well maintained forex reserves, not a reason.
      Next part is good. Most of the reasons are mentioned. Global inflation can also be mentioned.
      Conclusion is fine.
      Keep practicing. 🙂

  2. Shubham Chate Avatar
    Shubham Chate

    KPfn46R1gsfT12 – My Razorpay ID

    1. Staff @CD Avatar
      Staff @CD

      Shubham

      Decent attempt.
      Introduction is good.
      Benefits mentioned are also fine along with the data given by you.
      Next, briefly mention the generic factors affecting forex reserve such as FDI/FPI inflows (increases), reduction in imports, increase in exports etc, then talk specifically about India.
      Points mentioned are good in next part. Last point is not clear as to how the RBI monetary policy is affecting the recent decline, either provide an explanation or avoid the point as the RBI has also been following a tight monetary policy.
      Conclusion is fine.
      Keep practicing. 🙂

      4.5/10

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