<p>The central bank's accounts are not the same as entire country's accounts.</p>

<p>The foreign currency reserves statistic comes from the Reserve Bank of India, the central bank, when it discloses its account. The trade deficit is not a property of the central bank's accounts, although the central bank might have economists producing that statistic. The trade deficit is a property of the entire country in aggregate, which includes household, business, and government trade activity.</p>

CC BY-SA 4.0
2019-09-01T22:04:30.657Z
That was pretty ignorant of me to conflate the two. Having said that, its still not clear how a country's central bank can increase its FX reserves while its federal govt. runs a trade deficit. Can you recommend some sources where I can learn more about a central bank's P&L?
CodeWarrior
CC BY-SA 4.0
2019-09-03T08:33:16.860Z
The central bank issues a currency and it can use it to buy foreign currency. RBI annual reports https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?year=2017
H2ONaCl
CC BY-SA 4.0
2019-08-28T02:35:58.013Z
2019-08-28T02:35:58.013Z
H2ONaCl
<p>I saw somewhere that it's largely down to Indian employees abroad sending much of their earnings home, but I don't have the link to hand.</p>

CC BY-SA 4.0
2019-08-23T09:24:16.093Z
2019-08-23T09:24:16.093Z
Sentinel
<p>Balance of Trade: <a href="https://tradingeconomics.com/india/balance-of-trade" rel="nofollow noreferrer">https://tradingeconomics.com/india/balance-of-trade</a>
<a href="https://i.sstatic.net/vDGmX.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/vDGmX.png" alt="India&#39;s historical balance of trade"></a></p>

<p>Foreign Exchange Reserves: <a href="https://tradingeconomics.com/india/foreign-exchange-reserves" rel="nofollow noreferrer">https://tradingeconomics.com/india/foreign-exchange-reserves</a>
<a href="https://i.sstatic.net/Xc97S.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/Xc97S.png" alt="India&#39;s historical foreign exchange reserves"></a></p>

<p>Remittances do help (avg. \$4B/mo) but are not enough to offset the trade deficit (avg. \$15B/mo).</p>

<p>India Remittances: <a href="https://tradingeconomics.com/india/remittances" rel="nofollow noreferrer">https://tradingeconomics.com/india/remittances</a>
<a href="https://i.sstatic.net/dXHpN.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/dXHpN.png" alt="India remittances"></a></p>

<p><em>Please note that the time scales in the above charts are not the same.</em></p>

CC BY-SA 4.0
2019-08-23T07:01:58.907Z
Hi CodeWarrior, welcome to Economics.SE. Please consider taking the [tour]. And furthermore, it would appreciated if you could summarise the content of those links. Web pages may disappear or move. Thus rendering your links and a large part of your question, moot.
clem steredenn
<balance-of-trade><foreign-exchange>
How is India able to increase its foreign exchange reserves despite historically running a trade deficit?
CodeWarrior
# How is India able to increase its foreign exchange reserves despite historically running a trade deficit?

(Asked by: username_0 on 2019-08-22)

Balance of Trade: <https://tradingeconomics.com/india/balance-of-trade>
[![India's historical balance of trade](https://i.sstatic.net/vDGmX.png)](https://i.sstatic.net/vDGmX.png)

Foreign Exchange Reserves: <https://tradingeconomics.com/india/foreign-exchange-reserves>
[![India's historical foreign exchange reserves](https://i.sstatic.net/Xc97S.png)](https://i.sstatic.net/Xc97S.png)

Remittances do help (avg. \$4B/mo) but are not enough to offset the trade deficit (avg. \$15B/mo).

India Remittances: <https://tradingeconomics.com/india/remittances>
[![India remittances](https://i.sstatic.net/dXHpN.png)](https://i.sstatic.net/dXHpN.png)

*Please note that the time scales in the above charts are not the same.*

**Tags:** balance-of-trade, foreign-exchange
> **Comments:**
> **username_1**: Hi CodeWarrior, welcome to Economics.SE. Please consider taking the [tour]. And furthermore, it would appreciated if you could summarise the content of those links. Web pages may disappear or move. Thus rendering your links and a large part of your question, moot.  

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## 2 answers

### Answer by username_2 on 2019-08-28. Score: 1 | Accepted answer

The central bank's accounts are not the same as entire country's accounts.

The foreign currency reserves statistic comes from the Reserve Bank of India, the central bank, when it discloses its account. The trade deficit is not a property of the central bank's accounts, although the central bank might have economists producing that statistic. The trade deficit is a property of the entire country in aggregate, which includes household, business, and government trade activity.

> **Comments:**
> **username_0**: That was pretty ignorant of me to conflate the two. Having said that, its still not clear how a country's central bank can increase its FX reserves while its federal govt. runs a trade deficit. Can you recommend some sources where I can learn more about a central bank's P&L?  
> **username_2**: The central bank issues a currency and it can use it to buy foreign currency. RBI annual reports https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?year=2017  

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### Answer by username_3 on 2019-08-23. Score: 0

I saw somewhere that it's largely down to Indian employees abroad sending much of their earnings home, but I don't have the link to hand.


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