India's forex reserves swell by $110 bn

TAMING OF PRICE LINE

India's foreign exchange reserves shot up 55 per cent in 2007-08 to close at $309.16 billion "� an increase of nearly $110 billion from $199.18 billion at the end of 2006-07.

The surge was mainly due to large foreign institutional inflows, higher overseas borrowings by Indian companies and remittances from non-residents.

The riches have also meant a headache for the Reserve Bank of India (RBI) in managing excess liquidity released into the system when it bought dollars from the market.

This also raised the money supply that has partly contributed to the rise in inflation.