The Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday said with strong balance sheets of banks and corporates, private capex is likely to gather pace. He said key sectors including iron and steel and automobiles, are already witnessing private investments.
On private capex
At the moment, there is a twin balance sheet advantage. Both bank and corporate balance sheets are strong and deleverage, so there is space for making investments. Eventually, it depends on individual companies but private investment in some key sectors is happening such as in iron and steel, automobile, petroleum, metals, chemicals. Going forward, it should happen in other sectors because the ground conditions are favourable for investments.
On UPI linkage
With regard to UPI linkage, we have already done it with Singapore. So far as the RuPay card is concerned, it is already used in a few other countries. Recently, we have signed an MoU with UAE whereby we are going to link UPI with their IPP (Instant Payment Platform) system. It is work in progress and will happen in the coming months. Discussions are underway with a few other countries also for linkage of the payment systems, including some advanced economies who have evinced interest in linking to UPI. UPI is now perhaps the most efficient and advanced payment system in the world.
On foreign exchange reserves
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Lower current account deficit and ample capital flows have imparted strength to our external sector. The resultant accretion to forex reserves has provided a buffer against external shocks. Foreign exchange reserves have crossed the USD 600 billion mark. The umbrella has gathered further strength; and I am not saying this in the context of the monsoon rains!
On current account deficit
India’s current account deficit (CAD) was contained at 2 per cent of GDP in 2022-23 as compared with 1.2 per cent in 2021-22. Merchandise trade deficit has narrowed in Q1 of 2023-24 with contraction in imports exceeding contraction in exports. Services exports and remittances are, however, expected to provide cushion to the current account deficit. We, therefore, expect CAD to remain eminently manageable during the current financial year also.
On impact of amount held in Vostro account
It has become a part of the system, it will be a normal situation. In any case any trade relation of India with any country is not a short-term trade relation, it’s a long term trade relation whichever is the country. Therefore, there is no reason to expect that suddenly a country decides to pull out, why should they do that? It’s a continuing trade relation. So, we don’t see any stress or any concern with regard to the quantum that would be held in Vostro accounts from various countries.