Mumbai: Veteran banker Uday Kotak cautioned that India’s foreign exchange reserves remain strong but leave “very little room for complacency”, as large foreign capital flows expose the economy to risks from global volatility. At the ET Awards, Kotak said India has received around $1.5 trillion in foreign capital through FPI and FDI, which creates vulnerability if investors pull out during periods of uncertainty. He said the country currently holds around $700 billion in reserves, including gold and SDR, which is stronger than in previous decades but may not be sufficient to absorb large outflows. “Reserves are comfortable, but not something which we can take for granted,” Kotak said. On higher oil prices, Kotak said that if crude sustains between $90 and $100 a barrel, India’s current account deficit could widen from about 1% of GDP to 2.5%, requiring financing of $150 billion annually.
