No immediate threat to financial stability in India
Dr. Y.V. Reddy, Governor, Reserve Bank of India, while releasing of the India Development Report 2008 on January 3, 2008, stated that there is no visible immediate threat to financial stability in India, at this juncture.
However there is need for continued but heightened vigilance.
He reiterated the continued commitment of the Reserve Bank to lay stress on macro-economic stability in a way that it enhances the prospects, not merely for accelerated growth but for a genuinely more inclusive growth.
According to Dr Reddy a major area of vulnerability for India is the high consolidated public-debt to GDP ratio of over seventy percent and persisting, though moderating, consolidated fiscal deficit.
According to the India Development Report 2008 “The improvement in macroeconomic stability could be due to macroeconomic policies. While the prospects of achieving high growth are good, the prospect of maintaining macroeconomic stability must be rated low. The Indian economy is likely to be susceptible to periodic shocks originating from the global economy such as those related to global financial crises and volatility in crude oil prices.”
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