{
  "title": "IMF Executive Board Concludes 2023 Article IV Consultation with India",
  "publication": "IMF News, December 18, 2023",
  "sourceUrl": "https://www.imf.org/en/news/articles/2023/12/18/pr23458-india-imf-exec-board-concludes-2023-art-iv-consult",
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  "summary": "The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with India. India’s economy showed robust growth over the past year. Headline inflation has, on average, moderated although it remains volatile.",
  "publishDate": "2023-12-18",
  "sections": [
    {
      "heading": "Overview and recent performance",
      "content": "- India’s economy showed robust growth over the past year.\n- Headline inflation has, on average, moderated although it remains volatile.\n- Employment has surpassed the pre pandemic level; the informal sector continues to dominate while formalization has progressed.\n- The financial sector has been resilient—strongest in several years—and largely unaffected by global financial stress in early 2023.\n- The current account deficit in FY2022/23 widened as the post-pandemic recovery of domestic demand and transitory external shocks outweighed the impact of robust services exports and proactive diversification of critical oil imports.\n- The budget deficit has eased, but public debt remains elevated and fiscal buffers need to be rebuilt.\n- India’s 2023 G20 presidency highlighted the country’s role in advancing multilateral policy priorities."
    },
    {
      "heading": "Outlook and projections",
      "content": "- Growth is expected to remain strong, supported by macroeconomic and financial stability.\n- Real GDP is projected to grow at 6.3 percent in FY2023/24 and FY2024/25.\n- Headline inflation is expected to gradually decline to the target, though it remains volatile due to food price shocks.\n- The current account deficit is expected to improve to 1.8 percent of GDP in FY2023/24, supported by resilient services exports and, to a lesser extent, lower oil import costs.\n- Foundational digital public infrastructure and a strong government infrastructure program will continue to sustain growth.\n- Higher growth potential exists with greater contributions from labor and human capital if comprehensive reforms are implemented."
    },
    {
      "heading": "Risks to the outlook",
      "content": "- Downside risks:\n  - A sharp global growth slowdown in the near term would affect India through trade and financial channels.\n  - Further global supply disruptions could cause recurrent commodity price volatility, increasing fiscal pressures.\n  - Domestic weather shocks could reignite inflationary pressures and prompt further food export restrictions.\n- Upside risks:\n  - Stronger than expected consumer demand and private investment would raise growth.\n  - Further liberalization of foreign investment could increase India’s role in global value chains, boosting exports.\n  - Implementation of labor market reforms could raise employment and growth."
    },
    {
      "heading": "Executive Board assessment and recommended policy directions",
      "content": "- Directors broadly agreed with the staff appraisal and commended authorities for prudent macroeconomic policies and reforms that supported strong performance, resilience, and financial stability.\n- Fiscal policy:\n  - Directors welcomed the authorities’ near-term fiscal policy focus on accelerating capital spending while tightening the fiscal stance.\n  - Recommended ambitious medium-term consolidation efforts given elevated public debt levels and contingent liability risks.\n  - Improving revenue mobilization and spending efficiency to allow continued improvements in digital and physical infrastructure and targeted social support.\n  - Encourage a sound medium-term fiscal framework to promote transparency and accountability and align policies with development goals.\n- Monetary and exchange rate policy:\n  - Commended the Reserve Bank of India’s proactive monetary policy actions and strong commitment to price stability.\n  - Agreed the current neutral monetary policy stance, anchored on a data dependent approach, is appropriate and should gradually bring inflation back to target.\n  - Exchange rate flexibility should remain the first line of defense in absorbing external shocks; foreign exchange interventions should be limited to addressing disorderly market conditions.\n  - Noted divergence between staff and authorities on the reclassification of India’s de facto exchange rate regime for December 2022 to October 2023 and encouraged continued engagement to resolve differences.\n- Financial sector:\n  - Welcomed financial sector stability: sustained growth in bank credit, low levels of non-performing assets, and adequate capital and liquidity buffers.\n  - Called for continued supervision and prudential tools to preserve financial stability and manage emerging vulnerabilities, including rapid growth in unsecured personal loans.\n  - Advised further strengthening of regulatory and supervisory standards and encouraged public banks to continue building capital buffers.\n- Structural and other reforms:\n  - Encouraged comprehensive structural reforms to leverage favorable demographics and promote job-rich, inclusive, and greener growth.\n  - Priorities include improving labor market functioning, increasing female labor force participation, and progress on health, education, land, and agricultural reforms.\n  - Strengthening governance and the regulatory framework to foster transparency and safeguard public accountability.\n  - Continued progress on designing and implementing climate policies is critical to meet the authorities’ net zero emissions target date.\n  - Phasing out recent restrictive trade policies, further liberalizing the FDI regime, and improving the investment climate were encouraged."
    },
    {
      "heading": "Key statistics and selected indicators (highlights from Table 1)",
      "content": "- Real GDP (growth, percent): 3.9 (2019/20); -5.8 (2020/21); 9.1 (2021/22); 7.2 (2022/23); 6.3 (2023/24, proj.); 6.3 (2024/25, proj.).\n- Consumer prices - Combined (period average, percent): 4.8 (2019/20); 6.2 (2020/21); 5.5 (2021/22); 6.7 (2022/23); 5.4 (2023/24, proj.); 4.6 (2024/25, proj.).\n- Gross saving (percent of GDP): 29.2 (2019/20); 29.7 (2020/21); 30.0 (2021/22); 29.1 (2022/23); 29.9 (2023/24, proj.).\n- Gross investment (percent of GDP): 30.1 (2019/20); 28.8 (2020/21); 31.2 (2021/22); 31.0 (2022/23); 31.7 (2023/24, proj.); 31.9 (2024/25, proj.).\n- Central government overall balance (percent of GDP): -4.8 (2019/20); -8.6 (2020/21); -6.8 (2021/22); -6.5 (2022/23); -6.0 (2023/24, proj.).\n- General government overall balance (percent of GDP): -7.7 (2019/20); -12.9 (2020/21); -9.6 (2021/22); -9.2 (2022/23); -8.8 (2023/24, proj.); -8.5 (2024/25, proj.).\n- General government debt (percent of GDP): 75.0 (2019/20); 88.5 (2020/21); 83.8 (2021/22); 81.0 (2022/23); 82.0 (2023/24, proj.); 82.4 (2024/25, proj.).\n- Broad money (y/y percent change, end-period): 8.9 (2019/20); 12.2 (2020/21); 8.8 (2021/22); 9.0 (2022/23); 10.8 (2023/24, proj.); 7.8 (2024/25, proj.).\n- Merchandise exports (billions of U.S. dollars): 320.4 (2019/20); 296.3 (2020/21); 429.2 (2021/22); 456.1 (2022/23); 436.1 (2023/24, proj.); 460.6 (2024/25, proj.).\n- Merchandise imports (billions of U.S. dollars): 477.9 (2019/20); 398.5 (2020/21); 618.6 (2021/22); 721.4 (2022/23); 701.1 (2023/24, proj.); 751.7 (2024/25, proj.).\n- Current account balance (billions of U.S. dollars): -24.6 (2019/20); 24.0 (2020/21); -38.7 (2021/22); -67.0 (2022/23); -65.5 (2023/24, proj.); -73.0 (2024/25, proj.).\n- Current account (percent of GDP): -0.9 (2019/20); 0.9 (2020/21); -1.2 (2021/22); -2.0 (2022/23); -1.8 (2023/24, proj.).\n- Gross reserves (billions of U.S. dollars, end-period): 477.8 (2019/20); 577.0 (2020/21); 607.3 (2021/22); 578.4 (2022/23); 619.2 (2023/24, proj.); 673.9 (2024/25, proj.).\n- External debt (billions of U.S. dollars, end-period): 558.4 (2019/20); 573.4 (2020/21); 619.1 (2021/22); 624.3 (2022/23); 681.1 (2023/24, proj.); 748.3 (2024/25, proj.).\n- External debt (percent of GDP, end-period): 19.7 (2019/20); 21.5 (2020/21); 18.4 (2021/22); 18.7 (2022/23); 18.5 (2023/24, proj.).\n\nSource: IMF Executive Board Concludes 2023 Article IV Consultation with India; December 18, 2023.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- India and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2023/12/18/pr23458-india-imf-exec-board-concludes-2023-art-iv-consult"
    }
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    "Published: December 18, 2023",
    "India’s economy showed robust growth over the past year.",
    "Headline inflation has, on average, moderated although it remains volatile.",
    "Employment has surpassed the pre pandemic level; the informal sector continues to dominate while formalization has progressed.",
    "The financial sector has been resilient—strongest in several years—and largely unaffected by global financial stress in early 2023.",
    "The current account deficit in FY2022/23 widened as the post-pandemic recovery of domestic demand and transitory external shocks outweighed the impact of robust services exports and proactive diversification of critical oil imports.",
    "The budget deficit has eased, but public debt remains elevated and fiscal buffers need to be rebuilt.",
    "India’s 2023 G20 presidency highlighted the country’s role in advancing multilateral policy priorities.",
    "Growth is expected to remain strong, supported by macroeconomic and financial stability.",
    "Real GDP is projected to grow at 6.3 percent in FY2023/24 and FY2024/25.",
    "Headline inflation is expected to gradually decline to the target, though it remains volatile due to food price shocks.",
    "The current account deficit is expected to improve to 1.8 percent of GDP in FY2023/24, supported by resilient services exports and, to a lesser extent, lower oil import costs.",
    "Foundational digital public infrastructure and a strong government infrastructure program will continue to sustain growth.",
    "Higher growth potential exists with greater contributions from labor and human capital if comprehensive reforms are implemented.",
    "Downside risks:",
    "Upside risks:",
    "Directors broadly agreed with the staff appraisal and commended authorities for prudent macroeconomic policies and reforms that supported strong performance, resilience, and financial stability.",
    "Fiscal policy:",
    "Monetary and exchange rate policy:",
    "Financial sector:",
    "Structural and other reforms:",
    "Real GDP (growth, percent): 3.9 (2019/20); -5.8 (2020/21); 9.1 (2021/22); 7.2 (2022/23); 6.3 (2023/24, proj.); 6.3 (2024/25, proj.).",
    "Consumer prices - Combined (period average, percent): 4.8 (2019/20); 6.2 (2020/21); 5.5 (2021/22); 6.7 (2022/23); 5.4 (2023/24, proj.); 4.6 (2024/25, proj.).",
    "Gross saving (percent of GDP): 29.2 (2019/20); 29.7 (2020/21); 30.0 (2021/22); 29.1 (2022/23); 29.9 (2023/24, proj.).",
    "Gross investment (percent of GDP): 30.1 (2019/20); 28.8 (2020/21); 31.2 (2021/22); 31.0 (2022/23); 31.7 (2023/24, proj.); 31.9 (2024/25, proj.).",
    "Central government overall balance (percent of GDP): -4.8 (2019/20); -8.6 (2020/21); -6.8 (2021/22); -6.5 (2022/23); -6.0 (2023/24, proj.).",
    "General government overall balance (percent of GDP): -7.7 (2019/20); -12.9 (2020/21); -9.6 (2021/22); -9.2 (2022/23); -8.8 (2023/24, proj.); -8.5 (2024/25, proj.).",
    "General government debt (percent of GDP): 75.0 (2019/20); 88.5 (2020/21); 83.8 (2021/22); 81.0 (2022/23); 82.0 (2023/24, proj.); 82.4 (2024/25, proj.).",
    "Broad money (y/y percent change, end-period): 8.9 (2019/20); 12.2 (2020/21); 8.8 (2021/22); 9.0 (2022/23); 10.8 (2023/24, proj.); 7.8 (2024/25, proj.).",
    "Merchandise exports (billions of U.S. dollars): 320.4 (2019/20); 296.3 (2020/21); 429.2 (2021/22); 456.1 (2022/23); 436.1 (2023/24, proj.); 460.6 (2024/25, proj.).",
    "Merchandise imports (billions of U.S. dollars): 477.9 (2019/20); 398.5 (2020/21); 618.6 (2021/22); 721.4 (2022/23); 701.1 (2023/24, proj.); 751.7 (2024/25, proj.).",
    "Current account balance (billions of U.S. dollars): -24.6 (2019/20); 24.0 (2020/21); -38.7 (2021/22); -67.0 (2022/23); -65.5 (2023/24, proj.); -73.0 (2024/25, proj.).",
    "Current account (percent of GDP): -0.9 (2019/20); 0.9 (2020/21); -1.2 (2021/22); -2.0 (2022/23); -1.8 (2023/24, proj.).",
    "Gross reserves (billions of U.S. dollars, end-period): 477.8 (2019/20); 577.0 (2020/21); 607.3 (2021/22); 578.4 (2022/23); 619.2 (2023/24, proj.); 673.9 (2024/25, proj.).",
    "External debt (billions of U.S. dollars, end-period): 558.4 (2019/20); 573.4 (2020/21); 619.1 (2021/22); 624.3 (2022/23); 681.1 (2023/24, proj.); 748.3 (2024/25, proj.).",
    "External debt (percent of GDP, end-period): 19.7 (2019/20); 21.5 (2020/21); 18.4 (2021/22); 18.7 (2022/23); 18.5 (2023/24, proj.).",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
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