India: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for India

IMF Staff Country Reports, March 2, 2016

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The Indian economy is on a recovery path, supported by a large terms of trade gain (about 2½ percent of GDP) and reduced external vulnerabilities, though downside risks remain.
Important economic and structural reforms have been initiated, but further reforms are needed to boost India’s growth potential.
Notwithstanding the cyclical pickup, medium-term growth continues to be constrained by supply-side bottlenecks and weaknesses in the corporate and banking sectors.
Past Fund advice and the authorities’ macroeconomic policies have been broadly aligned, but progress on structural reforms has been partial.

Recovery supported by:
- A large terms of trade gain (about 2½ percent of GDP).
- Reduced external vulnerabilities.
Downside risks:
- Ongoing vulnerabilities in the corporate and banking sectors.
- Supply-side bottlenecks that constrain medium-term growth.

Reforms initiated:
- Important economic and structural reforms have been initiated (no further specifics provided in the summary).
Remaining needs:
- Further reforms are needed to boost growth potential.
- Greater progress required to address corporate and banking sector weaknesses.
Policy alignment:
- Past Fund advice and the authorities’ macroeconomic policies have been broadly aligned.
- Implementation on structural reforms has been partial.

Subjects: Commercial banks, Expenditure, External debt, Financial institutions, Inflation, Oil prices, Prices, Public investment spending
Keywords: bank credit growth, Commercial banks, CR, GDP data, Global, household inflation expectation, Inflation, ISCR, market price, net portfolio investment outflow, net spot sale, Oil prices, outflow, Public investment spending, South Asia