Once you take into account the forex needs for four months of imports, NRI deposits, short term debt and FII flows, India's forex reserves of $300 billion don't look so large.

The forex story for the country in the last couple of years has been a dream with the onus shifting to the monetary authority to balance increasing liquidity with rupee appreciation. The gathering of dollars essentially from the investment route has prefaced all such stories. While this cannot be contested, there is something else happening in the background which could be a concern that needs to be tracked carefully even though there are presently no signs of any problems. The issue in question is India's external debt.