In order to maintain external sector balance at a comfortable level, the IMF has recommended that India should gradually withdraw its fiscal and monetary policy stimulus, develop export infrastructure and negotiate free trade pacts with the key trading partners to maintain that sustainable boost for the country. IMF said it should liberlise its investment policy and reduce the tariffs, especially on intermediate goods.
Bringing these reforms in India could eventually attract more FDI. A multilateral lending agency projected India's current account deficit to increase from 1.2% to 3.1% in financial year 2023. India's external debt liabilities are moderate compared with peers and the short term rollover risks are limited. The IMF allowed the RBI to replenish official forex reserves which was recorded around 638.5 billion dollars at 2021 ending, it is now estimated to be 593.3 billion billion dollars as on June 24 2022.
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