Large fiscal deficit, CAD hit market confidence: IMF

Written by Press Trust of India | Washington | Updated: Aug 31 2013, 10:19am hrs
India's large fiscal and current account deficits have impacted market confidence, the IMF said, emphasising that the rupee decline posed both challenges and opportunities for the country.

"The current situation presents a challenge, obviously, to the government of India, but also an opportunity for the government to continue with its policy efforts on a variety of IMF spokesman Gerry Rice said.

Rice said the combination of large fiscal deficit and CAD, reliance on portfolio inflows, among other things, have affected market confidence. "The combination of large fiscal and CAD, inflation, sizable unhedged corporate foreign borrowing andreliance on portfolio inflows are longstanding vulnerabilities that has clearly has affected market confidence.