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IMF cautions India against rising corporate debt; forecasts 7.2% growth in 2017

Rising corporate debt continues to be a risk to the growth. The report says while emerging markets (EMs) are now better equipped to handle headwinds, rising corporate debt poses a threat.

April 21, 2017 / 05:30 PM IST
International Monetary Fund logo is seen inside the headquarters at the end of the IMF/World Bank annual meetings in Washington, U.S., October 9, 2016. REUTERS/Yuri Gripas - RTSRHS0

International Monetary Fund logo is seen inside the headquarters at the end of the IMF/World Bank annual meetings in Washington, U.S., October 9, 2016. REUTERS/Yuri Gripas - RTSRHS0

Financial stability around the world continues to improve, but rising corporate debt is a risk to growth, says the International Monetary Fund’s (IMF) latest Global Financial Stability Report.

The report says that emerging markets (EMs) are now better equipped to handle headwinds, even as it sounds a cautious note on rising corporate debt.

India’s debt, one of the highest among emerging markets, could worsen further in this 'environment of growing protectionism and risk premiums,' the report says, adding that the debt at risk could increase by as much 6.7 percentage point.

According to a Reserve Bank of India report, corporate debt in emerging markets, including India, has risen to 55 percent of the gross domestic product (GDP). A decade ago, this number was around 49 percent.