Q.3 What is the significance of foreign exchange reserves for a developing country and what are the reasons for the recent decline in India’s foreign exchange reserves? (10 Marks)

Mentor’s comment-

https://indianexpress.com/article/opinion/columns/rbi-and-the-rupee-to-break-a-free-fall-or-not-to-8059652/
In the intro, mention the steep decline in India foreing exchange in the last few months.
In the body, mention reasons a developing economy needs foreign exchange reserves for the settlement of capital and current account settlement. In the next part mention the factors responsible for the decline in India’s foreign exchange reserves.
Conclude by mentioning the steps taken by the RBI to deal with the challenge.