World Bank2014-01-282014-01-282013-10https://hdl.handle.net/10986/16642Although 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.en-USCC BY 3.0 IGOACCOUNTINGARBITRAGEASSET QUALITYAUCTIONSBALANCE OF PAYMENTSBALANCE SHEETBANK ACCOUNTSBANK BALANCE SHEETBANK BRANCHESBANK CREDITSBANKING ASSETSBANKING LAWSBANKING SECTORBANKING SECTOR REFORMBANKING SYSTEMBANKRUPTCYBANKRUPTCY LAWSBASIS POINTSBENEFICIARIESBORROWING COSTSBUDGET DEFICITBUSINESS CONFIDENCECAPITAL ACCOUNTCAPITAL ADEQUACYCAPITAL FLOWSCAPITAL FORMATIONCAPITAL INFLOWSCAPITAL OUTFLOWSCAPITAL REQUIREMENTCAPITALIZATIONCASH TRANSFERSCENTRAL BANKCENTRAL GOVERNMENT DEBTCOMMERCIAL BANKSCOMPLIANCE COSTSCONSUMER GOODSCONSUMER PRICE INDEXCONSUMPTION BASKETCONSUMPTION EXPENDITURECORE INFLATIONCORPORATE DEBTCOUPONSCREDIT GROWTHCURRENCYCURRENT ACCOUNTCURRENT ACCOUNT DEFICITDEBT BURDENDEBT LEVELDEBT LEVELSDEBT MARKETSDEBT RATIODEBT SERVICINGDEPOSITDEPOSITSDEPRECIATIONDERIVATIVEDEVELOPING COUNTRIESDEVELOPING COUNTRYDOMESTIC DEBTDOMESTIC MARKETDOMESTIC MARKETSECONOMIC DEVELOPMENTSECONOMIC GROWTHECONOMIC POLICYEMERGING ECONOMIESEMERGING MARKETEMERGING MARKET CURRENCIESEMERGING MARKET ECONOMIESEMERGING MARKETSEQUITY MARKETSEXCHANGE RATEEXCHANGE RATE MOVEMENTSEXCHANGE RATESEXPENDITURESEXPORT COMPETITIVENESSEXPORT PERFORMANCEEXPORTERSEXTERNAL BORROWINGSEXTERNAL COMMERCIAL BORROWINGEXTERNAL COMMERCIAL BORROWINGSEXTERNAL COMPETITIVENESSEXTERNAL DEBTEXTERNAL FACTORSEXTERNAL SHOCKSEXTERNAL SHORT-TERM DEBTFEDERAL RESERVEFINANCIAL CRISISFINANCIAL INSTITUTIONSFINANCIAL INSTRUMENTSFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL STRESSFINANCING REQUIREMENTSFISCAL BALANCESFISCAL DEFICITFISCAL DEFICITSFISCAL DISCIPLINEFISCAL POLICYFIXED CAPITALFOREIGN CURRENCYFOREIGN CURRENCY DEBTFOREIGN DEBTFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN EXCHANGE RESERVESFOREIGN FINANCINGFOREIGN INVESTMENTFOREIGN INVESTORSFUND MANAGERSGLOBAL TRADEGLOBALIZATIONGOVERNMENT DEFICITGOVERNMENT DEFICITSGOVERNMENT EXPENDITUREGOVERNMENT FINANCESGOVERNMENT SECURITYGOVERNMENT SPENDINGGROWTH RATEHOLDINGHOLDINGSHOUSEHOLD SAVINGSIMMOVABLE PROPERTYIMPORTSINCOME GROWTHINFLATIONINFLATIONARY EXPECTATIONSINFLATIONARY PRESSURESINFRASTRUCTURE INVESTMENTINSURANCEINTEREST INCOMEINTEREST PAYMENTSINTEREST RATEINTEREST RATE DIFFERENTIALSINTERNATIONAL BANKINVESTMENT PROJECTSINVESTMENT REQUIREMENTSINVESTOR CONFIDENCEISSUANCELABOR MARKETLEGAL FRAMEWORKLEGAL RIGHTLENDERLEVEL PLAYING FIELDLIQUIDATIONMACROECONOMIC ENVIRONMENTMACROECONOMIC POLICIESMARK-TO-MARKETMARKET CONDITIONSMARKET INTEGRATIONMARKET PRICESMATURITYMONETARY POLICYNON-PERFORMING LOANSOIL PRICESOUTPUT GAPPAYMENT SYSTEMPENSIONPENSION FUNDPENSION SYSTEMPORTFOLIOPORTFOLIO FLOWSPORTFOLIO INFLOWSPORTFOLIO INVESTMENTPOVERTY REDUCTIONPRICE CHANGESPRIVATE BANKSPRIVATE INVESTMENTPUBLIC DEBTPUBLIC SECTOR BANKSPUBLIC SPENDINGREAL EXCHANGE RATEREAL INTERESTREAL INTEREST RATESREAL PROPERTYREGULATORY AUTHORITYREMITTANCEREMITTANCESREPAYMENTREPOREPO RATERESERVE BANKRESERVE FUNDSRESERVESRETURNRETURNSRISK AVERSIONSAFETY NETSSALE OF INVESTMENTSSAVINGS CERTIFICATESSECTOR REFORMSSELF-REGULATIONSHORT-TERM BORROWINGSSHORT-TERM DEBTSHORT-TERM EXTERNAL DEBTSHORT-TERM GOVERNMENT SECURITIESSHORT-TERM INTEREST RATESSHORT-TERM TRADESINGLE PROPRIETORSHIPSSLOWDOWNSMALL BUSINESSESSOLVENCYSOVEREIGN DEBTSWAPT-BONDSTAXTAX COLLECTIONTAX COLLECTIONSTOTAL DEBTTOTAL EXTERNAL DEBTTOTAL IMPORTTRADE BALANCETRADE CREDITTRADE CREDITSTRADE DEFICITTRANSPARENCYTREASURIESTREASURYTREASURY BILLSTREASURY BONDSVALUATIONWITHDRAWALWITHDRAWAL OF FUNDSWorld Bank10.1596/16642