India's Budget deficit and reserves

[CHARGER]

Just wanna ask that how is it possible that although India is carrying such a massive deficit but still maintains hefty reserves , remittances , FDI ????

 

[kbd-raaf]

Remittances my friend. $70 odd billion of remittances.

 

[neehar]

massive???
The deficit was $5.2 billion in July through September, compared with $21.8 billion for the prior quarter, the Reserve Bank of India said in a statement in Mumbai yesterday. The shortfall was equivalent to 1.2 percent of gross domestic product. The current account is the broadest measure of trade, tracking goods, services and investment income.

India’s Shrinking Current-Account Gap Reduces Risks to Rupee - Bloomberg

 

[janon]

Remittances my friend. $70 odd billion of remittances.

Remittances are negligible compared to India's own GDP.

Anyway, the thread topic is a basic question in economics, and does not deserve a dedicated thread in the defence section.

 

[kbd-raaf]

Remittances are negligible compared to India's own GDP.

Anyway, the thread topic is a basic question in economics, and does not deserve a dedicated thread in the defence section.

Yes, negligible compared to GDP. But not negligible compared to Govt revenues.

 

[janon]

Yes, negligible compared to GDP. But not negligible compared to Govt revenues.

But remittance does not automatically count as govt revenue, does it? Most remittances go to personal savings or families, which are then taxed, like any other income. At least, that's what I understand.

 

[kbd-raaf]

But remittance does not automatically count as govt revenue, does it? Most remittances go to personal savings or families, which are then taxed, like any other income. At least, that's what I understand.

The remittances are in USD or other foreign currencies. All of that goes straight to the government's foreign reserves. The government then gives the remittee(?) the equivalent in rupees.

 

[Jason bourne]

But remittance does not automatically count as govt revenue, does it? Most remittances go to personal savings or families, which are then taxed, like any other income. At least, that's what I understand.

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