New Delhi, April 29 -- India needs a comprehensive and structural policy response to manage rising risks from rupee depreciation, imported inflation and a widening balance of payments (BoP) deficit, according to a report by the State Bank of India.

The report highlighted that the key concern at present is the "second-round effect" of external shocks, particularly through the exchange rate channel. It noted that depreciation in the rupee leads to higher imported inflation, while continued capital outflows further put pressure on the currency.

It stated, "The current Rupee depreciation is not in line with India's macro fundamentals! It is therefore imperative to control the second-round effects... hence ensuring that inflationary expectat...