IMF applauds India’s GDP data revamp, says currency pain is no sign of failure as country entered energy shock with strong fundamentals

At a press briefing in Bangkok on Thursday, the International Monetary Fund (IMF) said India entered the energy shock with strong fundamentals and has responded well to it, and that pressure on its exchange rate should not be read as a sign of economic failure.

Krishna Srinivasan, Director of the IMF's Asia and Pacific Department, was asked how India should read the gap between strong domestic growth and pressure from external markets, and what it would take for growth to stay resilient. "India entered this with very strong fundamentals," he said.

Also read: Asia set to ‘continue to outpace the world’, says IMF, as it asks central banks to stay focused on price stability


Growth was strong and fiscal prudence was firmly in place, he said, and "they have responded well to the shock".

The rupee has risen for four straight sessions, according to PTI, after the Reserve Bank of India (RBI) announced a set of measures on October 10 to stem its fall.

Exchange rate not a sign of failure

Srinivasan said the pressure on the exchange rate does not point to a real disconnect with growth. The exchange rate is "a function of global interest rates, investor risk appetite, and oil prices", he said, and India, as an oil importer, has been hit by the energy shock. He added that the exchange rate should not be treated as a measure of whether an economy is succeeding or failing.

The IMF's Regional Economic Outlook for Asia and Pacific, released on Thursday, names India among the emerging economies that faced pressure on their currencies after the energy shock. It said the pressure has partly eased over the past few months, and listed India among the economies that stepped into foreign exchange markets.

The World Economic Outlook describes the wider backdrop. It said benchmark interest rates in advanced economies have climbed to multi-decade highs, pushing up borrowing costs for emerging markets. Exchange rates have been highly volatile, especially in Asia, it said.

The IMF's baseline assumes oil at about $96 a barrel in 2026, and that the Strait of Hormuz reopens from March 2027.

RBI steps in, rupee gains

The RBI opened a special window on October 10 to meet the entire daily dollar needs of three state-run oil marketing companies, Indian Oil, Hindustan Petroleum and Bharat Petroleum, according to PTI. The window started on October 12 and will stay in place until further notice. It takes their dollar demand out of the spot market.

The central bank also tightened rules on forex derivatives to curb speculative bets against the rupee. Authorised dealers cannot allow users to rebook any rupee forex derivative contract that has been cancelled, PTI reported. Banks must also hold a Foreign Exchange Risk Reserve equal to 20 per cent of the notional amount of each eligible contract above $2 million. The reserve applies to contracts hedging current account transactions where the user is buying foreign currency against the rupee.

The rupee closed at 95.17 against the dollar on Wednesday, its fourth straight session of gains and a one-month high, according to PTI. It rose 171 paise over the four sessions, and forex traders told PTI the rise reflected the RBI's measures.

Finance Minister Nirmala Sitharaman said on Tuesday that the rupee has depreciated "significantly" over the past year and a half and that the RBI will continue efforts to prevent excessive volatility, PTI reported. She said most of the volatility comes from external challenges, while the government keeps domestic fundamentals sound.

In its October 7 policy statement, the RBI said it is committed to "orderly adjustments to the exchange rate" in line with macroeconomic fundamentals and to curbing excessive volatility. It said India's forex reserves stood at $734.6 billion as of October 2, enough for about 11 months of imports. The central bank also said foreign portfolio investors pulled out a net $10.3 billion between April and October 5, while net foreign direct investment rose to $13.8 billion in April-August. On the same day it raised the repo rate by 25 basis points to 5.50 per cent.

Growth revised up on a strong first quarter

Srinivasan said the IMF raised its India growth forecast because the April-June quarter came in much stronger than it had expected. The Fund now sees growth at 7 per cent this year and next, he said, and 6.9 per cent over the medium term.

The Ministry of Statistics and Programme Implementation (MoSPI) put real GDP growth at 7.8 per cent for April-June.

The Fund's World Economic Outlook, released on Tuesday, shows India at 7.0 per cent in both 2026-27 and 2027-28. On a calendar-year basis the figures are 7.4 per cent for 2026 and 7.0 per cent for 2027. The 2026 forecast is 0.5 percentage point higher than in April and 0.6 point higher than in July.

The report said India remains among the fastest-growing major economies, backed by resilient domestic demand and strong services activity.

It also said India stands out in the medium-term outlook with upward revisions. It credited favourable demographics, a large and growing domestic market and continued structural reforms. Among major economies, India is an exception in not needing more fiscal consolidation than currently planned to keep its debt ratio at 2025 levels, the report said.

IMF on India's GDP data revisions

Srinivasan was also asked about the revisions to India's GDP numbers. He said the authorities have issued a note explaining the revisions, and that the changes in methodology are "entirely consistent" with the advice the IMF has given, including from its statistics department. What MoSPI has done is in line with good practice, he said.

"There's always room for improvement," Srinivasan said, but the good work done by MoSPI in improving GDP statistics should be recognised.

MoSPI released a new GDP series with 2022-23 as the base year, replacing 2011-12, on February 27 this year. The ministry said the quarterly estimates follow guidelines in the IMF's Quarterly National Accounts Manual of 2017.

Asia's wider picture

In his opening remarks, Srinivasan said Asia's growth is projected to ease from 5 per cent in 2025 to 4.8 per cent in 2026 and 4.4 per cent in 2027, still ahead of the world. "Growth has surprised on the upside in India," he said, while countries that do not gain directly from the technology boom have seen their forecasts cut.

Also read: IMF sees India bucking global slowdown, raises 2026 growth forecast to 7%

He said risks remain tilted to the downside, including prolonged or renewed tension in the Middle East and an El Nino that could add to fiscal and inflation pressure. Support for people hit by the shocks should be targeted, he said, with the idea being to "protect people and not prices".

He named four reform priorities for the region. These are tackling youth unemployment and skill gaps while helping workers adapt to AI, strengthening social protection, improving energy security, and deepening regional integration.