50. Which of the following does not constitute the Foreign Exchange Reserves of India?

Gold

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Special Drawing Rights (SDRs)

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Investment in bonds issued by India Infrastructure Finance Company Limited (UK)

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RBI’s Reserve position with International Monetary Fund (IMF)

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Solution

The correct option is C Investment in bonds issued by India Infrastructure Finance Company Limited (UK)
The components of India’s Foreign Exchange Reserves include: Foreign currency assets (FCAs), Gold, Special Drawing Rights (SDRs), RBI’s Reserve position with International Monetary Fund (IMF). Investment in bonds issued by IIFC (UK) and amount lent to Sri Lanka under SAARC Swap and Special Currency Swap Arrangement are India’s International Investment Position (IIP), which is stock of country’s external financial assets.

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