The International Monetary Fund (IMF) has reclassified India’s de facto exchange rate regime from “floating” to “stabilized arrangement” for the period December 2022 to October 2023. This shift comes after an Article IV review, where the IMF staff diverged from Indian authorities’ perspective on exchange rate stability.
Q: Why did the IMF reclassify India’s exchange rate regime?
A: The IMF reclassified India’s exchange rate from “floating” to “stabilized arrangement” for Dec 2022-Oct 2023 due to observed stability, prompting disagreements with Indian authorities.
Q: What led to the disagreement between the IMF and Indian authorities?
A: Disagreement arose over the reasons for exchange rate stability. While India attributed it to external improvements, the IMF contested this view, resulting in a classification dispute.
Q: What are the key points in India’s economic landscape according to the IMF?
A: The IMF projects robust growth at 6.3% in FY2023/24, emphasizing the potential for even higher growth with accelerated reforms. Disagreements notwithstanding, ongoing dialogue is recommended to reconcile differences on the exchange rate regime.
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