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What does ‘using’ foreign exchange reserves for infrastructure spending mean? - Moneycontrol.com

When government spends, even when funded by utilization of dollar reserves, it essentially has the same effect on prices as deficit spending 

August 18, 2021 / 12:44 PM IST

What does ‘using’ foreign exchange reserves for infrastructure spending mean?

On August 11, the Union Road Transport and Highways minister Nitin Gadkari proposed the formulation of a policy that would enable the government to utilize the growing surplus of foreign exchange (forex) reserves held at the Reserve Bank of India (RBI) for infrastructure development in the country.    Before I attempt identifying the possible suggestions contained in the proposal, it is important to recognize what is meant by and what gives rise to ‘surplus’ reserves.  The ‘necessary’ portion usually refers to the quantum of forex reserves required to...

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