Description: India Development Update, October 2013

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India Development Update, October 2013

Although the recent market turmoil has been driven primarily by external factors, it has magnified India's macroeconomic vulnerabilities. India was just one of a large number of emerging market economies whose currency and capital account were...

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Bibliographic Details
Main Author:	World Bank
Language:	English en_US
Published:	Washington, DC 2014
Subjects:	ACCOUNTING ARBITRAGE ASSET QUALITY AUCTIONS BALANCE OF PAYMENTS BALANCE SHEET BANK ACCOUNTS BANK BALANCE SHEET BANK BRANCHES BANK CREDITS BANKING ASSETS BANKING LAWS BANKING SECTOR BANKING SECTOR REFORM BANKING SYSTEM BANKRUPTCY BANKRUPTCY LAWS BASIS POINTS BENEFICIARIES BORROWING COSTS BUDGET DEFICIT BUSINESS CONFIDENCE CAPITAL ACCOUNT CAPITAL ADEQUACY CAPITAL FLOWS CAPITAL FORMATION CAPITAL INFLOWS CAPITAL OUTFLOWS CAPITAL REQUIREMENT CAPITALIZATION CASH TRANSFERS CENTRAL BANK CENTRAL GOVERNMENT DEBT COMMERCIAL BANKS COMPLIANCE COSTS CONSUMER GOODS CONSUMER PRICE INDEX CONSUMPTION BASKET CONSUMPTION EXPENDITURE CORE INFLATION CORPORATE DEBT COUPONS CREDIT GROWTH CURRENCY CURRENT ACCOUNT CURRENT ACCOUNT DEFICIT DEBT BURDEN DEBT LEVEL DEBT LEVELS DEBT MARKETS DEBT RATIO DEBT SERVICING DEPOSIT DEPOSITS DEPRECIATION DERIVATIVE DEVELOPING COUNTRIES DEVELOPING COUNTRY DOMESTIC DEBT DOMESTIC MARKET DOMESTIC MARKETS ECONOMIC DEVELOPMENTS ECONOMIC GROWTH ECONOMIC POLICY EMERGING ECONOMIES EMERGING MARKET EMERGING MARKET CURRENCIES EMERGING MARKET ECONOMIES EMERGING MARKETS EQUITY MARKETS EXCHANGE RATE EXCHANGE RATE MOVEMENTS EXCHANGE RATES EXPENDITURES EXPORT COMPETITIVENESS EXPORT PERFORMANCE EXPORTERS EXTERNAL BORROWINGS EXTERNAL COMMERCIAL BORROWING EXTERNAL COMMERCIAL BORROWINGS EXTERNAL COMPETITIVENESS EXTERNAL DEBT EXTERNAL FACTORS EXTERNAL SHOCKS EXTERNAL SHORT-TERM DEBT FEDERAL RESERVE FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL STRESS FINANCING REQUIREMENTS FISCAL BALANCES FISCAL DEFICIT FISCAL DEFICITS FISCAL DISCIPLINE FISCAL POLICY FIXED CAPITAL FOREIGN CURRENCY FOREIGN CURRENCY DEBT FOREIGN DEBT FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES FOREIGN FINANCING FOREIGN INVESTMENT FOREIGN INVESTORS FUND MANAGERS GLOBAL TRADE GLOBALIZATION GOVERNMENT DEFICIT GOVERNMENT DEFICITS GOVERNMENT EXPENDITURE GOVERNMENT FINANCES GOVERNMENT SECURITY GOVERNMENT SPENDING GROWTH RATE HOLDING HOLDINGS HOUSEHOLD SAVINGS IMMOVABLE PROPERTY IMPORTS INCOME GROWTH INFLATION INFLATIONARY EXPECTATIONS INFLATIONARY PRESSURES INFRASTRUCTURE INVESTMENT INSURANCE INTEREST INCOME INTEREST PAYMENTS INTEREST RATE INTEREST RATE DIFFERENTIALS INTERNATIONAL BANK INVESTMENT PROJECTS INVESTMENT REQUIREMENTS INVESTOR CONFIDENCE ISSUANCE LABOR MARKET LEGAL FRAMEWORK LEGAL RIGHT LENDER LEVEL PLAYING FIELD LIQUIDATION MACROECONOMIC ENVIRONMENT MACROECONOMIC POLICIES MARK-TO-MARKET MARKET CONDITIONS MARKET INTEGRATION MARKET PRICES MATURITY MONETARY POLICY NON-PERFORMING LOANS OIL PRICES OUTPUT GAP PAYMENT SYSTEM PENSION PENSION FUND PENSION SYSTEM PORTFOLIO PORTFOLIO FLOWS PORTFOLIO INFLOWS PORTFOLIO INVESTMENT POVERTY REDUCTION PRICE CHANGES PRIVATE BANKS PRIVATE INVESTMENT PUBLIC DEBT PUBLIC SECTOR BANKS PUBLIC SPENDING REAL EXCHANGE RATE REAL INTEREST REAL INTEREST RATES REAL PROPERTY REGULATORY AUTHORITY REMITTANCE REMITTANCES REPAYMENT REPO REPO RATE RESERVE BANK RESERVE FUNDS RESERVES RETURN RETURNS RISK AVERSION SAFETY NETS SALE OF INVESTMENTS SAVINGS CERTIFICATES SECTOR REFORMS SELF-REGULATION SHORT-TERM BORROWINGS SHORT-TERM DEBT SHORT-TERM EXTERNAL DEBT SHORT-TERM GOVERNMENT SECURITIES SHORT-TERM INTEREST RATES SHORT-TERM TRADE SINGLE PROPRIETORSHIPS SLOWDOWN SMALL BUSINESSES SOLVENCY SOVEREIGN DEBT SWAP T-BONDS TAX TAX COLLECTION TAX COLLECTIONS TOTAL DEBT TOTAL EXTERNAL DEBT TOTAL IMPORT TRADE BALANCE TRADE CREDIT TRADE CREDITS TRADE DEFICIT TRANSPARENCY TREASURIES TREASURY TREASURY BILLS TREASURY BONDS VALUATION WITHDRAWAL WITHDRAWAL OF FUNDS
Online Access:	http://documents.worldbank.org/curated/en/2013/10/18403359/india-development-update http://hdl.handle.net/10986/16642

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Summary:	Although the recent market turmoil has been driven primarily by external factors, it has magnified India's macroeconomic vulnerabilities. India was just one of a large number of emerging market economies whose currency and capital account were adversely affected by a large outflow of portfolio investment this summer. The current downturn presents an opportunity to push ahead with critical reforms. The current situation is unlikely to place an insurmountable stress on the economy, but it does offer an opportunity for measures to strengthen the business environment, attract more Foreign Direct Investment (FDI), and increase productivity. The rupee depreciated sharply in May-August 2013, mainly caused by market fears of an early end to the Federal Reserve's stimulus program. As global investors shifted funds into US treasuries, the May-August fall in the rupee closely mirrored movements in other emerging market currencies and US T-bonds. The current account deficit moderated and exports performance improved. After reaching a record high of 6.5 percent of Gross Domestic Product (GDP) in the third quarter FY2013, the current account deficit improved to 3.6 percent of GDP in the fourth quarter. The decline in poverty has accelerated, but vulnerability remains high. Between 2005 and 2012, India lifted 137 million people out of poverty and reduced the poverty headcount (at the national poverty line) to 22 percent of the population. The depreciation in the rupee is unlikely to have major adverse effects and provides an opportunity to accelerate growth through further progress on the reform agenda. Financing of the gap is expected to come in roughly equal parts from FDI and institutional flows in FY2014, with a growing contribution from FDI in FY2015.