AN ANALYSIS OF RISING FOREIGN EXCHANGE RESERVES OF INDIA DURING THE COVID-19 PANDEMIC AND ITS POTENTIAL USE FOR ECONOMIC DEVELOPMENT

Foreign exchange reserves are the foreign currency cash or any international reserve asset held by the monetary authority of the country. A country must accumulate an adequate level of foreign exchange reserves so that the country can meet its all external obligations. At the same time, it is also important to ensure proper management and utilisation of foreign exchange reserves for the economic development of the nation. During the period of COVID-19 pandemic, a significant rise in foreign exchange reserve has been observed. So, the study is done to analyse the trends and adequacy level of foreign exchange reserves of India. The study also aims to analyse the effective way of utilising the foreign exchange reserves which can boost up the economy. The study is based on the data collected from secondary sources such as annual reports, monthly bulletins of RBI, official website of the Ministry of Finance, Government of India, IMF and World Bank. The study revealed that in the month of March 2020 India's stock of foreign exchange reserves declined significantly and from the month of April 2020 the trend shifted upwards and shows some positive growth. It has also been observed that the country is holding a sufficient amount of foreign exchange reserves which is much higher than the adequacy level. So, the government should take the full advantage of growing excess foreign exchange reserves and a portion of its reserves for the economic development of the nation during or after the pandemic crisis