India's Recent Macroeconomic Performance: An Assessment and Way Forward

67 Pages Posted: 3 Jun 2014

See all articles by Muneesh Kapur

Muneesh Kapur

Reserve Bank of India

Rakesh Mohan

International Monetary Fund (IMF)

Date Written: April 2014

Abstract

The macroeconomic policy response in India after the North Atlantic financial crisis (NAFC) was rapid. The overshooting of the stimulus and its gradual withdrawal sowed seeds for inflationary and BoP pressures and growth slowdown, then exacerbated by domestic policy bottlenecks and volatility in international financial markets during mid-2013. Appropriate domestic oil prices and fiscal consolidation will contribute to the recovery of private sector investment. Fiscal consolidation would also facilitate a reduction in inflation, which would moderate gold imports and favorably impact real exchange rate and current account deficit.

Keywords: Economic growth, India, Monetary policy, Exchange rates, Exports, Imports, Fiscal policy, Current account deficits, Fiscal consolidation, Capital Flows, Gold, Oil Demand, Savings., inflation, financial stability, real interest rate, real interest rates, high inflation, price elasticity, monetary policies, effective exchange rates, inflationary pressures, price stability, foreign exchange, inflation rate, reduction in inflation, post-crisis period, real rates, nominal variables, inflation targeting, real variables, inflation targeting framework, monetary fund, average inflation rate, monetary measures, price competitiveness, measure of inflation, government securities, dollar value, low infla

JEL Classification: E52, E63, F14, F40

Suggested Citation

Kapur, Muneesh and Mohan, Rakesh, India's Recent Macroeconomic Performance: An Assessment and Way Forward (April 2014). IMF Working Paper No. 14/68, Available at SSRN: https://ssrn.com/abstract=2445453

Muneesh Kapur (Contact Author)

Reserve Bank of India

Fort
Mumbai, Maharashtra 400001
India

Rakesh Mohan

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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