Unlike in recent years, the forex reserves dipped by $2 billion during 2005-06 as the country redeemed $7.1 billion through the India Millennium Deposits.
Besides IMD redemption, the survey cited two other reasons for decline in forex reserves - valuation losses from a weak dollar and widening of the current account deficit.
At the end of March 2005, the country's total reserves including foreign currency assets, gold, special drawing rights and reserve tranche position at IMF stood at $141.5 billion.
But the reserves declined to $139.2 billion at the end of January 2006, the survey observed. The biggest declines were during May and December 2005, of the order of $3.0 billion and $5.6 billion.
The sharp decline in December was due to IMD redemption. The weakening of US dollar compared to other major global currencies resulted in valuation loss of $5.0 billion in reserves in the first half of 2005-06.
This was also reflected in the movement of rupee vis-à-vis the dollar, it said. There was a sharp rise in current account deficit of balance of payments, which stood at $13 billion in April-September 2005-06, the survey said.
Even with such a deficit, on BoP basis there was a net addition of worth $6.5 billion in April-September 2005-06, the survey said, adding this accretion was, however, offset to a large extent by valuation losses.