Chalange for India in Forex management

India is an emerging economic hub; Indian trade to world has gone up significantly post WTO, after the BOP crisis in nineties India has managed their foreign exchange quite well. We are going to explore the practices which were opted in the past and the change that government is planning to do in future. And the practices which is opted by the global players to manage their foreign exchange reserve.

Till now, India is using most of their reserve for their BOP requirements we are more concern with liquidity and safety of the Forex reserve. We will explore the opportunity for the use of the Forex reserve for the development of infrastructure project in our country. Infrastructure in

India has been the core problem and great hindrance of our growth .In spite of huge expenditures in the infrastructure by the government country is still having inadequate facilities and blame has been given to the lack of fund with government, at the same time billions of dollar of Forex reserve are kept idle with the government .If part of the reserve will be planted in the infrastructure project it will help to fix the problem, once infrastructure issue will be solved the FDI inflow will increase and it will further increase the Forex reserve in longer period and help in prosperity of the nation.

Diversification by adding more currencies and their proportion in our foreign exchange reserve basket to adjust our reserve with our requirements, because world economy order is dynamic and it has changed a lot after the advent of European Union and their common currency, emergence of Euro zone and better performance of emerging market is also forcing to adopt the changes. Record fall in dollar index also propel the idea of balancing the Forex basket for the countries. World has become the global village and divided into several trade blocks which have their own dynamics, to adjust with these dynamics in changing equation country has to rebalance their policy regarding the Forex management for their sustainable growth in future.