Assets Under Management AUM

Unknown unknowns | Trade Standard Editorials

Indian policymakers may be underestimating the risk posed to the Indian economy by global macroeconomic conditions that have turned sharply unfavorable. A recent article in the Reserve Bank of India’s Monthly Bulletin argued that in the event of adverse volatility shocks or deviations of a magnitude comparable to historical evidence, capital outflows from India would represent in average 3.2% of gross domestic product. A “black swan” event that combines several negative shocks could lead to a capital outflow that would more than double. In the first case, at least, there may not be any destabilization of the external account given the abundant reserves. But the broader impact of such events on capital costs, investment, markets and growth would clearly be negative.



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First published: Wednesday, June 22, 2022. 11:09 PM IST