The IMF conference and the book launch of  “South Asia’s Path to Resilient Growth”, on Friday, January 6, 2023, in New Delhi, offered a chance to explore how South Asia may build on its development successes in the wake of the COVID-19 epidemic and geopolitical concerns to realize its potential. The conference concentrated on topics that are thought to be essential for long-term, high-quality growth. It covered topics such as how to hasten the process of income convergence in the region, how to take advantage of the demographic dividend, which is still significant in the majority of countries, reform priorities, such as climate-friendly policies for sustainable growth, and how to deal with increased vulnerabilities through macro-financial management. High-level South Asian delegates were present during the conference.

RBI Governor Shaktikanta Das identified inflation and debt as South Asian countries’ major challenges, which may be overcome by increasing exports. He said that multiple outside shocks had put South Asian economies under pricing pressure. In order to address the major issues brought on by COVID, inflation, the tightening of the financial markets, and the Russia-Ukraine conflict, he also identified six policy goals for the South Asian area. Inflation in South Asian nations, according to Das, might hamper the global economy if it is not controlled.

The RBI Governor stated in his speech on South Asia’s microeconomic issues and policy goals., “We are already in conversations with several of the nations in this region (South Asian Countries) to ease rupee settlement of cross border trade. That is one area that will have a great deal of promise in the future. RBI is proceeding with caution. A Unified Payment Interface (UPI) option is being offered by India in an effort to make cross-border payments simpler in this area. Bhutan and Nepal are two nations from the region with whom India has already signed agreements. Given the dim global trade outlook for 2023, more interregional commerce can foster economic development and job prospects. The region’s primary priority must be to control inflation. The global food and energy crises after the conflict in Ukraine, financial market volatility brought on by aggressive monetary policy tightening, and other external shocks have all contributed to ongoing pricing pressures in South Asian economies as well as other regions of the world.”

He said that there could be opportunity for South Asian countries to work together in the field of CBCD. Das said that the region was vulnerable to fuel inflation because of its reliance on imported fossil fuels. While supply chain bottlenecks and the recent weakening of commodity prices should assist to reduce inflation moving forward, threats to GDP and investment outlook may increase if inflation process at high level.

According to Governor of RBI, Shaktikanta Das,

• Putting price stability first may be the best course of action for the area at this time. However, in a situation when expectations for global growth and trade activity are weakening, the approach to disinflation needs to be cognizant of the growing danger to the economic outlook.
• Since the South Asian region is heavily dependent on fossil fuels and imported energy, making it vulnerable to fluctuating oil, gas, and coal prices, and in light of the predominating role of geopolitical factors in determining economic policy, the second priority for the South Asian nations should be containing external that vulnerability. The surge in recent years and associated vulnerabilities have undermined macroeconomic stability in several countries of the region.

IMF Deputy Managing Director Antoinette Sayeh claims that after recovering from the epidemic, India is now a “Bright Spot” in the globe. According to a senior official at the International Monetary Fund, India is in a relative “Bright Spot” in the global economy but has to expand its current strength in service exports to include job-rich industrial exports. Since the Corona era, India’s economy has improved. India, according to her, has to take use of its current advantages in service exports. In addition, Syeh stated during such a conference that India is expanding far faster than the global average. Employment and manufacturing exports may increase as a result of structural improvements and participation in the global value chain. India’s economy, being a ‘Bright Spot’, expanding at a rate noticeably higher than the global average. The IMF deputy managing director also stated that monetary policy is being used to combat persistently high inflation while macroeconomic policies respond to the strong headwind with physical measures, help for disadvantaged individuals, and financial support. In the next budget for 2023–2024, Sayeh expressed optimism that the federal government of India will outline a clear course for budgetary reduction.

India’s headline inflation decreased from 6.77% in October to 5.88% in November, an 11-month low. According to Das, inflation should be reduced by moving ahead as a result of the recent price softening and supply chain restrictions. However, growth and investment might be negatively impacted if inflation stays high. According to Das, increased intra-regional commerce in the South Asian area will result in growth and job possibilities when seen in the context of global trade. To promote Indian exports and encourage the growing interest of the international trading community in the rupee, the RBI put in place a system to settle international commerce in rupees in July.