Trend Analysis of Indian Foreign Exchange Reserves after Post COVID-19 Pandemic

Abstract

India is one of the leading countries for economic growth worldwide, and external trade showed a positive trend in the last quarter of the year. According to the Ministry of Economy and Finance (annual report 2021), there has been a strong correlation between capital flow and the positive growth of FOREX reserves as compared with Asian countries. It is the fourth-largest forex reserve holder in the world as of December 2022. India’s merchandise exports and imports showed a linear relationship and declined during the COVID-19 pandemic hit due to the financial burden, low parity of purchasing power, unemployment, low production performance in the manufacturing companies, higher debt, improper management of the service sector, etc. According to RBI statistics, foreign exchange reserves hovered at US$63.10 billion in the first half of last year. Financial inflation is a scourge in many parts of the world. A necessary analytical study will be necessary for taking the right decision at the right time to control financial inflation at the global level. In this paradigm, the present study will attempt to address the trend of forex and GDP by applying advanced statistical modeling techniques and revisiting financial principles to correlate with real data sets for predicting economic feasibility by 2030. This study will help economists and financial analysts initiate operational research on an empirical basis and also greatly assist in drafting financial policy at the national and global level.