By Nupur Anand

MUMBAI, (Reuters) – India’s macroeconomic fundamentals are strong. However, global developments present downside risks for spillover. This was stated by the Reserve Bank of India in Thursday’s monthly bulletin.

“The continuing geopolitical crisis has raised the uncertainty clouding world macroeconomics and financial landscape even while the world economy struggles from the pandemic,” wrote the RBI, noting that emerging economies are now at greater risk due to an uncertain economic outlook.

It observed that India has made steady progress in the domestic sector, but spiralling oil prices and unstable financial markets are causing new headwinds for the incomplete global recovery.

A rapid withdrawal of large amounts of fiscal support could lead to a steep downturn and push the economy over the edge, according to the RBI.

“Exiting policy makers have to contend with the razor’s edge trade-off between cliffs and ramps,” RBI added.

It continued to maintain an accommodative policy despite rising inflation. The key lending rate was left unchanged.

RBI highlighted once more the dangers posed by virtual currencies. It noted that crypto technology was based on a philosophy of evading government controls, threatens financial sovereignty and makes it vulnerable to strategic manipulation.

“They can (and if allowed most likely will) wreck the currency system, the monetary authority, the banking system, and in general government’s ability to control the economy,” RBI wrote.

The central bank issued a strong warning last month against cryptocurrency investing and had even compared it with Ponzi schemes.