Handling external shocks

Following the US Fed's monetary policy lead is not in the interest of emerging economies

Illustration: Binay Sinha
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Illustration: Binay Sinha

Ashima Goyal
Unrelenting global shocks have had negative fallouts for India, as for other countries. But India is one of the few nations where growth is relatively high. India’s size, diversity, the policy space available from good coordination of structural reforms with fiscal and monetary policies, a strengthened financial sector and deleveraged corporate balance sheets, have helped smooth the impact of external shocks since 2020. Can this continue?

The latest shock is the rapid tightening by the US Fed and other advanced economies (AEs). There are pressures to follow the US’ monetary policy. But this is designed for the excess macro-stimulus and tight
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First Published: Nov 16 2022 | 10:54 PM IST

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