According to Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), India has been very efficient at managing its finances, but the rise in global energy prices will have a detrimental impact on its economy.
Gita Gopinath, the IMF’s First Deputy Managing Director, said the war has posed a challenge to economies around the world, including India, during a media roundtable on the Russian invasion of Ukraine and its global impact on Thursday.
IMF said that India is heavily reliant on energy imports
“India is heavily reliant on energy imports, and the cost is rising. This has an impact on Indian households’ purchasing power.” “If you look at headline inflation data, India’s inflation is close to approximately 6%, which is the top end of the Reserve Bank of India’s inflation band,” Ms. Gopinath said.
This has ramifications for the country’s monetary policy, and it’s a problem in many countries of the world, not just India, she explained. “Clearly, the most major channel of impact on the Indian economy is energy prices,” Ms. Georgieva added.
“India has been extremely good in managing its finances,” she said, adding that “India is an importer and the increase in energy prices will have a negative impact.” She emphasized that there are some financial resources available to meet the problem.
“Our advice to our members is to ensure that the most vulnerable populations are protected from price increases, not only in energy but also in food costs for countries where this will be a substantial factor,” the IMF managing director added. “Focus your financial resources on people who are in desperate need of assistance. We’d also look into monetary policy responses, to see how they may be adjusted to match what’s going on “Ms. Georgieva went on to say.
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