This Article IV Consultation reports that India’s growth remains relatively high, but various factors, including the unsettled global outlook and slow government decision making, have weighed on investment. Inflation has moderated, leading the Reserve Bank of India (RBI) to pause monetary tightening, but remains elevated. The slow pace of fiscal consolidation has added to demand pressures. Ensuring sustainable growth will require reinvigorating the structural agenda, rather than relying on monetary and fiscal stimulus. Measures to facilitate infrastructure investment, reform the financial sector and labor markets, and address agricultural productivity and skills mismatches stand out.


This Article IV Consultation reports that India’s growth remains relatively high, but various factors, including the unsettled global outlook and slow government decision making, have weighed on investment. Inflation has moderated, leading the Reserve Bank of India (RBI) to pause monetary tightening, but remains elevated. The slow pace of fiscal consolidation has added to demand pressures. Ensuring sustainable growth will require reinvigorating the structural agenda, rather than relying on monetary and fiscal stimulus. Measures to facilitate infrastructure investment, reform the financial sector and labor markets, and address agricultural productivity and skills mismatches stand out.


(As of December 31, 2011)

I. Membership Status:

Joined December 27, 1945; Article VIII.

II. General Resources Account

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III. SDR Department:

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IV. Outstanding Purchases and Loans: None

V. Financial Arrangements:

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VI. Projected Obligations to Fund (SDR million; based on existing use of resources and present holdings of SDRs):

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VII. Exchange Rate Arrangement:

As per the Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER), the exchange rate in India is classified as floating. The exchange rate of the rupee is determined in the interbank market, where the Reserve Bank of India (RBI) intervenes at times. The RBI’s role is to modulate excessive volatility so as to maintain orderly conditions. On August 20, 1994, India accepted the obligations of Article VIII, Sections 2, 3, and 4 of the IMF Articles of Agreement. India maintains the following restrictions on the making of payments and transfers for current international transactions, which are subject to Fund approval under Article VIII, Section 2(a): restrictions related to the nontransferability of balances under the India-Russia debt agreement; restrictions arising from unsettled balances under inoperative bilateral payments arrangements with two Eastern European countries; and a restriction on the transfer of amortization payments on loans by non-resident relatives. The Executive Board has not approved these restrictions.

VIII. Article IV Consultation:

The previous Article IV consultation discussions were held in November 2010. The staff report (IMF Country Report No. 11/50) was discussed by the Executive Board on December 22, 2010.

IX. FSAP Participation and ROSCs:

FSSA/FSAP report was issued in January 2001; a fiscal transparency ROSC was issued in February 2001 (; the data model of the ROSC (Country Report No. 04/96) was issued in April 2004. The missions for the second FSAP took place in 2011, and the concluding meetings were held in Delhi and Mumbai in January 2012.

X. Technical Assistance:

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XI. Outreach and Other Activities:

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XII. Resident Representative:

A resident representative’s office was opened in November 1991. Mr. Sanjaya Panth has been Senior Resident Representative since August 2008.


In Bank FY2011 (July 1-June 30), IBRD/IDA lending totaled US$3.47 billion. IFC committed $754 million in FY2011. The World Bank Group’s (WBG) Country Strategy (CAS) for India for 2009-2012 focuses on helping India to fast-track the development of much-needed infrastructure and to support the seven poorest states in achieving higher standards of living for their people. The strategy envisaged a total proposed International Bank for Reconstruction and Development (IBRD) lending program of US$14.6 billion for the four-year CAS period, of which approximately US$3 billion additional IBRD financing was in response to the financial crisis. The International Development Association (IDA) 15 allocation was SDR 2.919 billion (US$ equivalent 4.79 billion). Midway through CAS implementation the projected IBRD lending was revised upward to US$16 billion. India’s IDA 16 allocation is SDR 3,243.6 billion US$ equivalent 5.019 billion).

As a result of the financial crisis as well as increased Government demand for the Bank Group’s support, the pace of IBRD lending accelerated in FY10-11, bringing India closer to its Single Borrower Limit (SBL) of $17.5 billion earlier than anticipated. To help maintain India’s IBRD net exposure within the SBL and ensure medium-term sustainability of the India program, the Reserve Bank of India is discussing an agreement with the IBRD and the Bank for International Settlements on purchases of IBRD Special Private Placement Bonds. The IBRD and Government are working to increasing the selectivity of new projects and scaling up efforts to leverage private finance with IBRD investments. India is IFC’s largest country exposure. IFC is focusing on projects with development impact and is managing its exposure via mobilization and selectivity.

The overarching objective of the CAS is to scale up the development impact of Bank Group assistance to help India achieve: rapid, inclusive growth; sustainable development; and improve service delivery. It aims to do all this while strengthening project implementation, improving the effectiveness of public spending, and achieving demonstrable results to scale up the impact of World Bank assistance. The diversity of India calls for a differentiated, tailored approach. In India’s low-income states and lagging regions in more advanced states, the focus is on achieving the MDGs, relying primarily on IDA resources and non-lending technical assistance (TA). In more advanced states and at the central level, the focus is on strengthening institutions so that they can deal with emerging middle income challenges, relying on IBRD lending and cutting-edge analytical work. In the context of WBG India CAS, IFC’s three strategic pillars are inclusive growth, climate change and regional and global integration. IFC is prioritizing support for the Low Income and North East States in order to better promote inclusive growth.

The World Bank’s India Program is increasingly focused on supporting large, transformative development programs, with projects such as the National Ganga River Basin, Pradhan Mantri Gram Sadak Yojana (PMGSY) Second Rural Roads, and National Rural Livelihoods, and innovative operations such as the Karnataka Watershed. The shift to a more substantial engagement has raised the visibility and influence of the Bank Group, while creating opportunities for greater focus on public policy and institutional reform.

India: World Bank Financial Operations

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Source: World Bank.

On an Indian fiscal year basis beginning April 1.

Based on loan approval date.


The Asian Development Bank (AsDB) operations in India began in 1986. Cumulative public sector loan commitments totaled $25.3 billion as of 31 December 2011 for 159 loans. With an additional $1.9 billion in private sector loans (the latter without government guarantee), total loan commitments on a cumulative basis amount to $27.2 billion. These funds have been provided from AsDB’s ordinary capital resources (OCR). Also, AsDB has approved equity investments amounting to $0.3 billion. AsDB’s lending and equity activities are summarized below.

India: Asian Development Bank Financial Operations (sovereign and non-sovereign)

(In millions of U.S. dollars, as of 31 December 2011)

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Source: Asian Development Bank.

AsDB’s India Country Partnership Strategy (2009-2012) (CPS) is based on four strategic pillars: (i) Support for the process of inclusive and environmentally sustainable growth; (ii) Catalyzing investment through the use of innovative business and financing modalities; (iii) Strengthening the results orientation of project design and implementation and emphasizing knowledge solutions; and (iv) Support for regional cooperation. The CPS has been designed to support Government of India’s efforts in facilitating inclusive growth and speeding up the pace of poverty reduction and social development as emphasized in the Eleventh Five-Year Plan (2007-2012). It has been prepared within a results-based framework, and aims at significantly strengthening AsDB support for infrastructure development in the relatively poorer states of India, promoting public private partnerships in infrastructure, supporting climate change adaptation and mitigation, and encouraging the use of innovative financing modalities (non-sovereign loans and cofinancing) to enhance the leverage of AsDB operations.


1. Macroeconomic statistics are adequate for surveillance, but weaknesses remain in the timeliness and coverage of certain statistical series. India has an intricate system for compiling economic and financial statistics and produces a vast quantity of data covering most sectors of the economy. India subscribed to the Special Data Dissemination Standards (SDDS) on December 27, 1996 and started posting its metadata on the Dissemination Standards Bulletin Board on October 30, 1997. It is currently in observance of the SDDS, although it uses flexibility options for timeliness of data on general government operations and on the periodicity and timeliness of labor market data.

2. The data module of the Report on Observance of Standards and Codes (ROSC, IMF Country Report No. 04/96) was published in April 2004. It assesses India’s data dissemination practices against the SDDS requirements and assesses the quality of six datasets based on the Data Quality Assessment Framework (DQAF) developed by STA.

3. National accounts and employment statistics: The Central Statistical Organization (CSO) releases a new series of national accounts, with base year 2004–2005 with a dissemination lag for quarterly releases of two months. Estimates of value added in constant prices for public administration and defense may be biased upwards, as they are based on the government’s wage bill (with arrears counted in the year that they are paid) deflated by the Wholesale Price Index (WPI). There are long standing deficiencies in employment data: they are only available on an annual basis and with a substantial lag, and they only cover the formal sector, which accounts for a small segment of the labor market.

4. Price statistics: Since January 2006, the Labour Bureau has published a CPI for industrial workers with a 2001 base year. A revised CPI with new weights was unveiled in early 2011. Presently, there are four CPIs, each based on the consumption basket of a narrow category of consumers (namely industrial workers, urban and nonmanual employees, agricultural laborers, and rural laborers). The CPIs are published with a lag of about one month. With the exception of the industrial workers CPI, the other indices are based on weights that are over ten years. The WPI was also recently revised and has a 2004/05 base year. Despite recent progress, real estate and housing price data are not available on a timely basis and the geographic coverage remains limited.

5. External sector statistics: While the concepts and definitions used to compile balance of payments statistics are broadly in line with the fifth edition of the Balance of Payments Manual (BPM5), the RBI presentation does not strictly follow the BPM5. Furthermore, trade data have quality, valuation, timing, and coverage problems, and data on trade prices, volumes, and composition are not regularly available on a timely basis. Only trade credit extended for more than 180 days is included in the balance of payments (and the IIP and external debt data); trade credit is often less than 180 days in most countries. Bilateral data on services exports to the United States and other developed countries are manifold higher than counterpart services imports published by these same countries. External debt statistics are available on a quarterly basis with a one quarter lag. Estimates of short-term external debt are presented in the debt statistics on an original maturity basis. The short-term maturity attribution on a residual maturity basis is only available annually (and excludes residual maturity of medium- and long-term nonresident Indian accounts). The international investment position (IIP) statistics cover the sectors prescribed in the BPM5 and these data are disseminated within six months of the reference period in respect of annual data. Coverage of direct investment positions data is hampered by the absence of appropriate legal or institutional authority. India began disseminating the Data Template on International Reserves and Foreign Currency Liquidity as prescribed under the SDDS in December 2001. The more up-to-date information on certain variables, such as total foreign reserves, foreign currency assets, gold, and SDRs, are available on a weekly basis and are disseminated as part of a weekly statistical supplement on the RBI web site.

6. Monetary and financial statistics: The RBI web site and the RBI Bulletin publish a wide array of monetary and financial statistics, including reserve money and its components, RBI’s survey, monetary survey, liquidity aggregates (outstanding amounts), interest rates, exchange rates, foreign reserves, and results of government securities auctions. The frequency and quality of data dissemination have improved substantially in recent years.

7. Concepts and definitions used by the RBI to compile monetary statistics are in broad conformity with the guidelines provided in the Monetary and Financial Statistics Manual (MFSM). Nevertheless, the following concepts and principles deviate from the MFSM. First, the resident sector data do not provide sufficient information on the sectoral distribution of domestic credit. Specifically, under their present sectorization scheme, the authorities subdivide the resident nonbank sector data by (i) central government; (ii) state government; and (iii) the commercial sector (including other financial corporations, public and other nonfinancial corporations, and other resident sectors). Second, commercial banks add accrued interest to credit and deposit positions on a quarterly basis only (instead of the prescribed monthly basis).

8. The RBI reports monetary data for IFS on a regular basis. Since October 2006, the RBI has initiated the electronic reporting of monetary data, which is a major improvement from the previous paper-based reporting which was prone to errors and delays. India has also submitted to STA test data (starting from December 2001 data) on the Standardized Report Forms (SRFs) that have been developed to implement the methodology outlined in the MFSM. STA is working with the authorities in resolving the outstanding data issues on the development of the SRFs.

9. Government finance statistics: The Ministry of Finance (MoF) is responsible for compiling and disseminating the GFS. India reports the budgetary central government cash flow statement within one month after the reference month and stock of liabilities within one quarter after the reference quarter. With the agreement of the authorities, STA uses these data to compile a monthly cash flow statement for publication in the International Financial Statistics, following the GFSM 2001 presentation, with some missing breakdowns, particularly for expenditure. T However, no monthly data on fiscal performance at the state level are available. Data on the functional and economic classification of expenditures are available with considerable lag. There is also scope to improve the analytical usefulness of the presentation of the fiscal accounts. For example, classification of government expenditure between developmental/nondevelopmental and plan/nonplan obscures the economic nature and impact of fiscal actions. The MoF reports central government data (on a cash basis) for publication in the Government Finance Statistics Yearbook (GFSY), the latest reported data corresponding to 2010. Two years after the reference year, the Ministry of Finance reports general government data to STA in the GFSM 1986 format, that staff reworks to the GFSM 2001 presentation for inclusion in the GFSY (latest reported data correspond to 2008). Data on the general government operations are not internationally comparable as they exclude data on the operations of the extra-budgetary funds, local governments, and social security funds. Under the SDDS, India disseminates annual general government data within 3 quarters after the reference year, using the timeliness flexibility option but meets the SDDS specifications for central government debt and operations.

India: Table of Common Indicators Required for Surveillance

As of January 31, 2012

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Daily (D), Weekly (W), Biweekly (BW), Monthly (M), Quarterly (Q), Annually (A), Irregular (I); Not Available (NA)

Reflects the assessment provided in the data ROSC (published on April 2, 2004, and based on the findings of the mission that took place during May 13-30, 2002) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O), largely observed (LO), largely not observed (LNO), or not observed (NO).

Same as footnote 7, except referring to international standards concerning source data, statistical techniques, assessment and validation of source data, assessment and validation of intermediate data and statistical outputs and revision studies.

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state governments

Including currency and maturity composition