An $87 billion gift.

"India received $87 billion in remittances in 2021, the top remittance recipient, and way ahead of countries like China and Mexico, according to a World Health Organisation report." ET. "The United States was the largest source country for remittances in 2020, followed by the United Arab Emirates, Saudi Arabia and Switzerland. Remittances increase or maintain consumer spending and soften the blow of economic hardship, such as during the COVID-19 pandemic." If it wasn't for Indians working abroad our current account deficit (CAD) would have gone out of control. "The country's foreign exchange reserves declined by USD7.541 billion to USD572.712 billion in the week ended July 15 as the Reserve Bank (RBI) continued to intervene in the market to curb the fall of the rupee. In the previous week ended July 8, the reserves shrunk by USD8.062 billion to USD580.252 billion," RBI data showed. ET. "External debt (private and sovereign) of about $267 billion will mature in the next 12 months; that might cause a big hit on the forex reserves," wrote RP Gupta. "CAD is more damaging compared to Fiscal deficit. Typically, CAD is financed by global investors through external debt (private and sovereign) and equity investments. Hence forex reserves are accrued by expanding 'international liabilities'." Structural reforms to boost exports and improve global competitiveness are necessary. "All types of taxation in the 'intermediate goods' such as, energy and minerals, must be reduced which have a multiplier impact on the production cost of entire goods and services." Forget cutting taxes. Instead rates of GST have been hiked on packaged foods, solar water heater and system, petroleum and methane and on hospital beds. NDTV. "India's economic activity showed early signs of cooling off in June as acute price pressures, rising interest rates and a falling rupee dampened sentiment." BS. "India's trade deficit widened to a record $26.2 billion in June as imports rose faster than exports, raising concerns about a further slide in the rupee and a bigger current account deficit." Why? "Japanese yen, Euro, Swiss franc, British pound have depreciated much more against the dollar (than the rupee)," said Chief Economic Advisor V Anantha Nageswaran. This makes our exports more expensive to these nations while making imports cheaper. The RBI is "justified in using the country's foreign exchange reserves" to smooth out rupee volatility, said Sanjeev Sanyal. The IMF has cut its global growth forecast to 2.9% from 3.6% and warned of a possible recession. BT. The RBI and the government may be gambling on a strong rupee to control inflation by reducing import prices until global recession brings down commodity prices and relieves inflationary pressures in India. However, if the US Federal Reserve continues to raise interest rates it may spark a huge outflow of dollars from emerging markets, said Swaminathan Aiyar. "This will create other problems where the exchange rate will go down, our imported inflation will go up and we would feel a bigger need to raise interest rates." Playing Russian roulette. Can have only one outcome.