While Adani is in the spotlight, here's the Indian economy.

While everyone was preoccupied with Adani, a major event occurred under the radar. India's foreign exchange reserves fell to their lowest level in 11 weeks, the rupee fluctuated narrowly between 82.56 and 82.89, and exports fell. In the past few weeks, headlines have been dominated by stories about George Soros, the Hindenburg disaster, and the Adani mining company. Next up was the Congress's 85th plenary session, during which ED raids on its leaders and the arrest of its spokesperson took center stage. Economic concerns took a back seat during the chaos.

Almost nobody paid attention to the news that foreign exchange reserves had dropped to an 11-week low, that the rupee was trading in a narrow range of 82.56 to 82.89, and that exports were falling. Let's bring back the bolded headlines, shall we?

For the week ending February 17, foreign exchange reserves fell by $5.68 billion to an 11-week low of $561.267 billion. This was the third consecutive week that reserves fell, following declines of $8.32 billion to $566.948 billion on February 10 and $1.49 billion on February 3. Reserves fell by more than $15 billion in February.

Overall decline

There was a decrease of $4.51 billion in foreign currency assets, the largest part of forex reserves, to a total of $496.07 billion; a decrease of $1.04 billion in the value of gold reserves to a total of $41.81 billion; a decrease of $87 million in the value of Special Drawing Rights (SDRs) to a total of $18.26 billion; and a decrease of $34 million in India's reserve position with the International Monetary Fund to a total of

Having foreign exchange reserves ensures that the Reserve Bank of India (RBI) has a safety net if the value of the rupee suddenly drops. This is important for several reasons, including:

Foreign exchange and how we make it

Through trade and the acquisition of additional funds via loans

The decline in exports continued in January, falling by 6.58% to $32.9 billion. The value of engineering exports fell by 3.37 percentage points to $88.27 billion from April to January 2022–2023. Retail sales of jewelry and gemstones fell by 0.54% to $31.61 billion.

Crude oil imports increased by 53.54% to $ 178.45 billion in the first 10 months of the current fiscal year, while imports of coal, coke, and briquettes increased by 18.91% to $43.17 billion.

The current account deficit (the difference between imports and exports) is expected to reach 3.1% of India's GDP this year, up from 1.2% in the previous year's estimate.

A Heavy Burden • As of September 2022, India's external debt was $621.5 billion, according to RBI data. The ratio of gross international debt to the gross domestic product was 19.2 percent.

• About 44% of India's foreign exchange reserves, or $267 billion, are needed to pay off the country's external debt due in the next nine months.

A Falling Rupee

The value of the rupee has decreased by 81 paise so far this month. On February 24, it dropped from 81.94 on February 1, 2023, to 82.75.

The declining value of the rupee against the US dollar raises the cost of servicing the country's debt denominated in dollars.

decreasing GDP

Median estimates from a group of 42 economists in a survey conducted between February 10 and 24 pointed to a slowing in quarterly gross domestic product growth to 4.6% in the December quarter.

In the current quarter of 2023 and 2024, it is predicted to slow even further to 4.4%.