The report also says that the government's commitment to continue on the path of fiscal discipline, the efforts on containing the revenue deficit and rationalising subsidies need to be reinforced.
Despite global recovery being fragile, the Indian economy stands out among the emerging markets as a destination of growth and for investment, indicates the Reserve Bank of India's (RBI) financial stability report.
The report also says that the government's commitment to continue on the path of fiscal discipline, the efforts on containing the revenue deficit and rationalising subsidies need to be reinforced.
It also cautions that the risk of commodity price reversals should be monitored like the recent climbing of oil prices from $30 a barrel to $50, though the external sector indicates a strong position with forex reserves at a record high of $363.83 billion and a lower trade deficit, helped in part by the lower crude oil prices.
With the increasing impact of prevailing uncertainties and dynamics in the rest of the world on India, continuing on the path of sound domestic policies and structural reforms becomes even more important.
FSR also warns that "there may not be any room for complacency in the current global scenario."
It also says that despite the efforts being made to contain the revenue deficit and rationalise subsidies, there is a need to increase the tax revenues by increasing the tax base.
Regarding the expectations of monsoon-driven recovery, its says that the prediction of a normal monsoon augurs well for 2016-17. The agriculture sector needs radical reforms to address food prices and while stress in the corporate sector showed some signs of moderation in 2015-16, the risks of lower demand and weaker debt servicing capacity continue.
On the global front, the FSR says, "The global recovery remains fragile amidst weak and uneven growth, a slowdown in world trade and prevailing uncertainties in financial and commodities markets. At the same time, unintended side effects of current ultra-easy monetary policies being pursued in many advanced economies are becoming evident, even as their effectiveness in stimulating growth is yet to be firmly established."
It adds that the easy monetary policies without an exit strategy and how long these policies would be prolonged is causing concerns, referring to the quantitative easing by the Federal Reserve of US and also the European Central Bank.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "economy")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}