Portfolio flows in India are the most sensitive to shifts in risk sentiment globally and in an adverse scenario, potential portfolio outflows can average up to 3.2 per cent of GDP or USD 100 billion (Rs 7.8 lakh crore) in a year, an RBI article said.
The article, titled 'Capital Flows at Risk: India's Experience' published in the RBI's latest bulletin, further said in a 'black swan' event comprising a combination of shocks, potential portfolio outflows can rise to 7.7 per cent of GDP, highlighting the need for maintaining liquid reserves to quell such potential bouts of instability.
With the spate of emerging market crises since the 1990s and the experience with the global financial crisis and its aftermath, attention has turned from the benefits associated with capital flows to their consequences such as accentuating financial vulnerabilities, aggravating macroeconomic instability and spreading contagion, it said.
Applying a capital flows at risk approach, it is observed that in an adverse scenario, potential portfolio outflows can average up to 3.2 per cent of GDP," said the article authored by RBI Deputy Governor Michael Debabrata Patra, along with Harendra Behera and Silu Muduli.
"In response to shocks to each of the determinants of a size that is at least equal to what has been observed in the historical experience, potential portfolio outflows can be in the range of 2.6 to 3.6 per cent of GDP, averaging to 3.2 per cent of GDP (or USD 100.6 billion in a year)," the article said.
It further said there is a 5 per cent chance of portfolio outflows from India of the order of 3.2 per cent of GDP or USD 100.6 billion in a year in response to a COVID-type contraction in real GDP growth, or a GFC (global financial crisis) type decline in interest rate differentials vis-a-vis the US.
A 'black swan' event could be characterised by a combination of all adverse shocks experienced in Indian history coming together, leading to a perfect storm.
Aggressive rate hike by the US Federal Reserve, coupled with elevated inflation and high valuation of equities continued to keep foreign investors at bay from the Indian stock market as they pulled out Rs 31,430 crore in this month so far.
With this, net outflow by Foreign Portfolio Investors (FPIs) from equities reached Rs 1.98 lakh crore so far in 2022, data with depositories showed.
The Centre on Monday started a two-day programme in Rajasthan's Udaipur to inform central government pensioners about various rules and procedures of disbursement of pension. It will also update the field functionaries about the changes that take place from time to time through various amendments in the policy and procedures.
The Department of Pension and Pensioners' Welfare (DoPPW), under the Union Ministry of Personnel, Public Grievances and Pensions, has started a series of awareness programme for central pension processing centres and field functionaries handling pension related work in the bank," an official statement said.
Since the major pension disbursing authorities are banks, the first such programme in the series is being held for officers of State Bank of India (SBI) on June 20 and 21 June at Udaipur, covering the northern region of country, said the statement issued by the Personnel Ministry.
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