The country should focus on continued fiscal consolidation, according to IMF.
The International Monetary Fund (IMF), in its latest report titled The 2017 External Sector Report, has advised India to remain vigilant as “like other EMs, too great a reliance on debt financing and portfolio inflows would create significant external financing vulnerabilities.”
The report also said that other risks to the Indian economy stem from global financial volatility and longer-than-expected cash normalisation following the currency exchange initiative.
"...India’s economic risks stem from intensified global financial volatility including from a faster-than-anticipated normalisation of monetary policy in key advanced economies, longer-than-expected cash normalisation following the currency exchange initiative, as well as slower global growth," the report added.
Though India’s Monetary policy framework has been strengthened, the report said, adding, "but further supply-side reforms and continued fiscal consolidation are key requirements to achieve a low and stable rate of inflation in the medium-term as well as to keep gold imports contained."
The need of the hour is to continue fiscal consolidation, the report said.