Page 29 - Policy Economic Report -August 2026

POLICY AND ECONOMIC
OIL & GAS MARKET

China, Singapore and Japan, although the rate of export growth eased across both manufacturing and
services.

Employment conditions provided a notable positive signal during the month. Employment across India's
private sector increased at the joint-fastest pace since June 2025, alongside April 2026, as companies
responded to rising demand and increased hiring requirements. The improvement was concentrated in
services, where employment expanded, while manufacturing employment declined for the first time in
two-and-a-half years. Stronger hiring in services also enabled companies to reduce outstanding business,
with composite backlogs declining at their steepest rate in five years, although the overall reduction
remained modest.

India’s external position

Foreign Exchange Reserves

India's foreign exchange reserves strengthened sharply during August 2026, reaching a new record level
and further reinforcing the country's external-sector resilience. According to the latest data released by
the Reserve Bank of India (RBI), India's foreign exchange reserves increased by US$12.42 billion during the
week ended 21 August 2026, reaching US$729.33 billion. The sharp weekly increase marks a significant
improvement in India's reserve position and provides a stronger buffer against external shocks, including
global financial volatility, commodity-price fluctuations and geopolitical uncertainties.

The increase was primarily driven by a rise in Foreign Currency Assets (FCAs), which constitute the largest
component of India's reserves. FCAs increased by US$9.48 billion to US$591.33 billion during the
reporting week. Gold reserves also recorded a substantial increase of US$2.80 billion, reaching US$114.22
billion. Special Drawing Rights (SDRs) rose marginally by US$112 million to US$18.85 billion, while India's
reserve position in the IMF increased by US$26 million to US$4.93 billion.

The latest increase also marks a sustained strengthening in India's reserve position. Foreign exchange
reserves have now increased for eight consecutive weeks, rising by around US$63 billion over this period.
Compared with the end of March 2026, reserves have increased by approximately US$38.22 billion, while
the year-on-year increase stood at around US$38.61 billion. In rupee terms, total reserves stood at
approximately ?69.81 lakh crore as of 21 August 2026.

The recent accumulation has been supported by sustained foreign-currency inflows following measures
introduced by the RBI in June to attract overseas deposits and foreign-currency borrowings. The increase
in reserves therefore reflects not only valuation movements in reserve assets but also stronger foreign-
currency inflows into the domestic financial system.

External Trade Developments

India's external trade continued to expand during July 2026, supported by strong growth in merchandise
exports and resilient services exports. Total exports of merchandise and services were estimated

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