IMF MD says India is good at managing finances but global energy price hike will hurt it

India has been very good at managing its finances but Rise in global energy prices International Monetary Fund Managing Director Kristalina Georgieva said it was going to have a negative impact on the economy.

During a media roundtable on Thursday Russian invasion of Ukraine And its global impact, Gita Gopinath, who is the IMF’s first deputy managing director, said the war posed a challenge to economies around the world, including India.

“India depends heavily on energy imports and the price is rising. This has an impact on the purchasing power of Indian households.”

“If you are looking at the headline inflation numbers, inflation in India is close to around six per cent, which is the upper end of the Reserve Bank of India inflation band,” Ms. Gopinath said.

He said this has an impact on monetary policy in the country and is a challenge not just in India but in many parts of the world.

“Clearly the most important channel of impact on the Indian economy is energy prices,” said Ms. Georgieva.

India is an importer and the rise in energy prices is going to have a negative impact, he said, adding, “India has been very good at managing its finances.” He stressed that there is some fiscal space to be able to respond to the challenge.

“Our advice to our members is first and foremost to protect the most vulnerable populations from rising prices, not only energy but also foot food prices for countries where this is going to be a significant factor,” IMF Managing said the director.

Ms. Georgieva said, “Target your financial space for those who are in serious need of support. We will also look at monetary policy responses, how to appropriately calibrate what is happening. ”