IMF’s Rice Says India’s Economic Vulnerabilities Now Elevated

India’s economy faces bigger vulnerabilities as global liquidity tightens, presenting the government with both a challenge and an opportunity, an International Monetary Fund spokesman said.

“The combination of large fiscal and current-account deficits, high and persistent inflation, sizable unhedged corporate foreign borrowing, and reliance on portfolio inflows are longstanding vulnerabilities that have now been elevated as global liquidity conditions tighten,” IMF spokesman Gerry Rice said today in a press briefing in Washington.

Rice was answering a question about the risks facing Asia’s third-largest economy as its currency, the rupee, plummets.

“The current situation presents a challenge obviously to the government of India, but also an opportunity for the government to continue in its policy efforts on a variety of fronts,” Rice said.

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