Sustaining Improvement in BoP Position – A Challenge
The Economic Survey 2013-14, presented today on 9th
July 2014 in the Lok Sabha by the Union Finance Minister Shri Arun Jaitley, has
noted that sustaining the improvement in the BoP position in the medium term is
a challenge. Given the uncertain global environment and the frequent bouts of
flight of capital on aversion to all kinds of risks, there is need to put in
place a mechanism for closely monitoring developments and assessing
vulnerabilities so as to take measures to cope with the situation.
The Survey observed that the improvement in the BoP position
during the latter half of 2013-14 was indeed swift and owed to exceptional
measures like restrictions on non-essential imports and limited period
incentives for certain varieties of capital flows and the impact of overall
economic slowdown on imports. Sustaining the robust outcome in the medium term
is a challenge as some of the restrictions need to be gradually withdrawn and
there is a need to adjust not merely to the asset purchase taper by the US Fed
but also to the eventual exit from the accommodative monetary policy stance by
the advanced economies.
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