• UGI USER
  • Dec 20, 2023
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IMF’S TAKE ON INDIA’S EXCHANGE RATE AND ECONOMIC INDICATORS

Why in the News?

  • IMF directors recommend India maintains exchange rate flexibility as the primary defence against external shocks.
Source: Slide Share

About IMF stance on India’s Economic Health :

  • Monetary Policy: The Reserve Bank of India’s proactive monetary policy actions and commitment to price stability are commended.
  • Structural Reforms: Directors recommend continuing structural reforms to leverage India’s favourable demographics for job-rich, inclusive, and greener growth.
  • Financial risks: Acknowledgment of declining systemic financial risks but a call for continued supervision and prudential tools.
  • IMF advice :
  • IMF directors advise strengthening regulatory standards, supervisory measures, and building capital buffers for financial stability.
  • Foreign exchange interventions should be limited to addressing disorderly market conditions.

Performance of Economic Indicators :

  • India’s economy shows robust growth, surpassing pre-pandemic levels, with stable financial sectors.
  • Current account deficit widens in FY2022-23 due to post-pandemic recovery and external shocks.
  • Fiscal deficits ease, but public debt remains elevated, requiring the rebuilding of fiscal buffers.
  • Growth expected to remain strong, with real GDP projected to grow at 6.3% in FY24 and FY25.