Some capital will flow out of India if US Fed does any tapering, warns IMF

Says forex reserve are adequate and inflation is down, but must be watched due to supply bottlenecks; cuts potential medium term growth by 25bps to 6% due to Covid impact

The International Monetary Fund (IMF) has cautioned that any tapering by the US Federal Reserve and similar action by other central bankers would lead to some capital flow out of India even as the country has enough foreign exchange at the moment, amid high foreign direct and portfolio investments. The IMF has also cut India's potential growth rate in the medium term to six per cent from earlier 6.25 per cent due to the impact of Covid on investments and labour markets.

To a query whether hot money would outflow from India as the Federal Reserve tapers and commodity prices