August 7, 2018
Stability-oriented macroeconomic policies and progress on structural reforms continue to bear fruit.
", "publishDate": "2018-08-07", "sections": [ { "heading": "Overview", "content": "- Date: August 7, 2018.\n- Main message: Stability-oriented macroeconomic policies and progress on structural reforms continue to bear fruit; recovery underway after disruptions from the November 2016 currency exchange initiative and July 2017 GST rollout.\n- Press Release No. 18/330." }, { "heading": "Macroeconomic developments and challenges", "content": "- Growth:\n - Growth slowed to 6.7 percent in FY2017/18 after prior disruptions; recovery led by an investment pickup.\n- Inflation:\n - Headline inflation averaged 3.6 percent in FY2017/18 (a 17-year low).\n - Medium-term headline inflation rose to 4.9 percent in May 2018, above the mid-point of the RBI’s target band of 4 percent ± 2 percent.\n- External sector:\n - Current account deficit (CAD) widened to 1.9 percent of GDP in FY2017/18, on rising imports and oil prices.\n - Gross international reserves: US$424.5 billion at end-March 2018 (about 8 months of prospective imports of goods and services); declined to US$407.8 billion in the third week of June 2018.\n- Fiscal and public debt:\n - Persistently-high household inflation expectations and large general government fiscal deficits and debt remain key macroeconomic challenges.\n- Financial sector:\n - Systemic macro-financial risks persist; weak credit cycle could impair growth and the sovereign-bank nexus has created vulnerabilities." }, { "heading": "Near-term outlook and projections (IMF staff)", "content": "- Growth projections:\n - FY2018/19: 7.3 percent.\n - FY2019/20: 7.5 percent.\n - Medium-term expectation: growth expected to rise to 7¾ percent.\n- Inflation projection:\n - Headline inflation projected at 5.2 percent in FY2018/19.\n- Current account:\n - CAD projected to widen to 2.6 percent of GDP (driven by rising oil prices and strong demand for imports, offset by a slight increase in remittances).\n- Policy actions:\n - Monetary policy was tightened in early June 2018.\n - Fiscal consolidation expected to resume in FY2018/19, with FY2018/19 Union Budget deficit target of 3.3 percent of GDP (equivalent to 3.6 percent of GDP in IMF terms).\n - Financial sector reforms undertaken to address twin balance sheet problems and revive bank credit." }, { "heading": "Risks (tilted to the downside)", "content": "- External risks:\n - Further increase in international oil prices.\n - Tighter global financial conditions.\n - Retreat from cross-border integration, including spillover risks from a global trade conflict.\n - Rising regional geopolitical tensions.\n- Domestic risks:\n - Tax revenue shortfalls related to continued GST implementation issues.\n - Delays in addressing twin balance sheet problems and other structural reforms." }, { "heading": "Executive Board assessment and policy recommendations", "content": "- Fiscal policy:\n - Continued fiscal consolidation needed to reduce public debt.\n - Target: achieve a public debt level of 60 percent of GDP by FY2022/23 (as recommended by India’s Fiscal Responsibility and Budget Management Review Committee).\n - Directors emphasized reaching this year’s budget target and taking corrective actions if required.\n - Encourage enhancing GST compliance and scope for simplifying the framework.\n- Monetary and exchange rate policy:\n - Supported recent tightening of monetary policy; further gradual tightening likely needed to anchor expectations and maintain credibility.\n - Welcomed authorities’ commitment to a flexible exchange rate; FX intervention should remain two‑sided and limited to disorderly market conditions.\n- Macro‑financial and structural reforms:\n - Stress on accelerating initiatives to address high non‑performing loans in public sector banks and corporate sector leverage.\n - Importance of a comprehensive plan to improve governance, internal controls, and operations of public sector banks; consider more rapid withdrawal of public ownership.\n - Capital flow management framework moving toward greater liberalization, notably in foreign direct investment.\n - Further liberalization of trade and foreign investment would be beneficial; authorities’ commitment to a multilateral rules‑based trade system welcomed.\n - Emphasized modernizing labor laws and regulations and measures to increase formal employment, particularly for women, to boost productivity and harness the demographic dividend.\n - Land reforms remain essential to facilitate infrastructure development, raise agricultural productivity, and foster rapid inclusive growth." }, { "heading": "Selected social and economic indicators (highlights extracted from table)", "content": "- GDP (2017/18) nominal (in billions of U.S. dollars): 2,602.\n- GDP per capita (U.S. dollars) (IMF staff est.): 1,942.\n- Headcount ratio at $1.90 a day (2011): 21.2.\n- Undernourished (2015): 14.5.\n- Population total (in billions, 2016/17): 1.32.\n- Urban population (percent of total): 33.1.\n- Life expectancy at birth (years, 2015/16): 68.3.\n- Gini index (2011): 35.2.\n- Real GDP growth (selected years):\n - 2014/15: 7.4\n - 2015/16: 8.2\n - 2016/17: 7.1\n - 2017/18: 6.7\n - 2018/19 (Est.): 7.3\n - 2019/20 (Projections): 7.5\n- Consumer prices — Combined (period average):\n - 2014/15: 5.8\n - 2015/16: 4.9\n - 2016/17: 4.5\n - 2017/18: 3.6\n - 2018/19 (Est.): 5.2\n - 2019/20 (Projections): 4.8\n- Gross saving (percent of GDP):\n - 2014/15: 33.0\n - 2015/16: 30.7\n - 2016/17: 29.7\n - 2017/18: 28.8\n - 2018/19 (Est.): 29.6\n - 2019/20 (Projections): 30.0\n- Gross investment (percent of GDP):\n - 2014/15: 34.2\n - 2015/16: 31.8\n - 2016/17: 30.3\n - 2017/18: 30.6\n - 2018/19 (Est.): 32.2\n - 2019/20 (Projections): 32.2\n- Central government overall balance (percent of GDP):\n - 2014/15: -4.5\n - 2015/16: -4.1\n - 2016/17: -3.7\n - 2017/18: -4.0\n - 2018/19 (Est.): -3.6\n - 2019/20 (Projections): -3.5\n- General government debt (percent of GDP):\n - 2014/15: 67.8\n - 2015/16: 69.6\n - 2016/17: 68.9\n - 2017/18: 70.4\n - 2018/19 (Est.): 68.7\n - 2019/20 (Projections): 67.2\n- Bank credit to the private sector (y/y percent change, end-period):\n - 2014/15: 9.3\n - 2015/16: 10.6\n - 2016/17: 8.0\n - 2017/18: 9.8\n - 2018/19 (Est.): 13.6\n - 2019/20 (Projections): 13.3\n- Merchandise exports (in billions of U.S. dollars):\n - 2014/15: 316.5\n - 2015/16: 266.4\n - 2016/17: 280.1\n - 2017/18: 309.0\n - 2018/19 (Est.): 349.7\n - 2019/20 (Projections): 385.0\n- Merchandise imports (in billions of U.S. dollars):\n - 2014/15: 461.5\n - 2015/16: 396.4\n - 2016/17: 392.6\n - 2017/18: 469.0\n - 2018/19 (Est.): 546.6\n - 2019/20 (Projections): 592.2\n- Current account balance (in billions of U.S. dollars):\n - 2014/15: -26.8\n - 2015/16: -22.1\n - 2016/17: -15.2\n - 2017/18: -48.7\n - 2018/19 (Est.): -70.6\n - 2019/20 (Projections): -68.3\n- Current account balance (percent of GDP):\n - 2014/15: -1.3\n - 2015/16: -1.1\n - 2016/17: -0.7\n - 2017/18: -2.6\n - 2018/19 (Est.): -2.2\n- Gross reserves (in billions of U.S. dollars, end-period):\n - 2014/15: 341.6\n - 2015/16: 360.2\n - 2016/17: 370.0\n - 2017/18: 424.5\n - 2018/19 (Est.): 420.4\n - 2019/20 (Projections): 434.7\n- External debt (in billions of U.S. dollars, end-period):\n - 2014/15: 474.7\n - 2015/16: 485.0\n - 2016/17: 471.8\n - 2017/18: 514.4\n - 2018/19 (Est.): 559.3\n - 2019/20 (Projections): 609.5\n- Exchange rate (rupee/U.S. dollar, end-period):\n - 2014/15: 62.6\n - 2015/16: 64.8\n - 2016/17: 65.0\n\nSource: IMF Executive Board Concludes 2018 Article IV Consultation with India; August 7, 2018.\n\n---\n\n\n References\n\n- India's Strong Economy Continues to Lead Global Growth\n- India and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2018/08/06/pr18330-india-imf-executive-board-concludes-2018-article-iv-consultation" } ], "bullets": [ "[Markdown version](/en/news/articles/2018/08/06/pr18330-india-imf-executive-board-concludes-2018-article-iv-consultation/index.md)", "[Structured JSON version](/en/news/articles/2018/08/06/pr18330-india-imf-executive-board-concludes-2018-article-iv-consultation/index.json)", "[Bundle manifest](/en/news/articles/2018/08/06/pr18330-india-imf-executive-board-concludes-2018-article-iv-consultation/bundle-manifest.json)", "Published: August 7, 2018", "Date: August 7, 2018.", "Main message: Stability-oriented macroeconomic policies and progress on structural reforms continue to bear fruit; recovery underway after disruptions from the November 2016 currency exchange initiative and July 2017 GST rollout.", "Press Release No. 18/330.", "Growth:", "Inflation:", "External sector:", "Fiscal and public debt:", "Financial sector:", "Growth projections:", "Inflation projection:", "Current account:", "Policy actions:", "External risks:", "Domestic risks:", "Fiscal policy:", "Monetary and exchange rate policy:", "Macro‑financial and structural reforms:", "GDP (2017/18) nominal (in billions of U.S. dollars): 2,602.", "GDP per capita (U.S. dollars) (IMF staff est.): 1,942.", "Headcount ratio at $1.90 a day (2011): 21.2.", "Undernourished (2015): 14.5.", "Population total (in billions, 2016/17): 1.32.", "Urban population (percent of total): 33.1.", "Life expectancy at birth (years, 2015/16): 68.3.", "Gini index (2011): 35.2.", "Real GDP growth (selected years):", "Consumer prices — Combined (period average):", "Gross saving (percent of GDP):", "Gross investment (percent of GDP):", "Central government overall balance (percent of GDP):", "General government debt (percent of GDP):", "Bank credit to the private sector (y/y percent change, end-period):", "Merchandise exports (in billions of U.S. dollars):", "Merchandise imports (in billions of U.S. dollars):", "Current account balance (in billions of U.S. dollars):", "Current account balance (percent of GDP):", "Gross reserves (in billions of U.S. dollars, end-period):", "External debt (in billions of U.S. dollars, end-period):", "Exchange rate (rupee/U.S. dollar, end-period):", "[India's Strong Economy Continues to Lead Global Growth](http://www.imf.org/en/News/Articles/2018/08/07/NA080818-India-Strong-Economy-Continues-to-Lead-Global-Growth)", "[India and the IMF](http://www.imf.org/external/country/IND/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2018/08/06/pr18330-india-imf-executive-board-concludes-2018-article-iv-consultation/index.md", "json": "/en/news/articles/2018/08/06/pr18330-india-imf-executive-board-concludes-2018-article-iv-consultation/index.json", "bundleManifest": "/en/news/articles/2018/08/06/pr18330-india-imf-executive-board-concludes-2018-article-iv-consultation/bundle-manifest.json" }, "generatedAtUtc": "2026-09-25T22:08:51.541Z" }