The International Monetary Fund (IMF) has praised India’s outstanding economic performance and predicted that the country will contribute more than 16 per cent to global growth as a result of strong development fueled by significant infrastructure and digitalization reforms.

India’s IMF mission chief, Nada Choueiri, emphasized the country’s advancements in a special interview with PTI. “It’s one of the fastest-growing large emerging markets and it’s contributing, in our current projections, more than 16 per cent of global growth this year,” the speaker underlined, highlighting India’s unique position among peer nations.

Released on Monday, the IMF’s annual Article IV consultation with India confirmed the nation’s trajectory as one of the world’s fastest-growing big economies. India’s economy is still gaining speed while confronting global challenges, such as a downturn in a fragmented globe, thanks to its cautious macroeconomic policies.

Choueiri emphasized the government’s dedication to infrastructure development, pointing to it as an essential building block for long-term economic expansion. She remarked on the large, youthful, and expanding population of India, underscoring the possibility of even greater growth if targeted structural changes are implemented.

India’s rebound from the pandemic

One prominent change that sticks out is digitalization, which creates a solid foundation for future growth and higher productivity. In order to preserve debt sustainability, the IMF’s annual report suggests concentrating on policy goals including restocking fiscal buffers, guaranteeing price stability, upholding financial stability, and promoting inclusive development through extensive structural reforms.

India’s comeback after the pandemic has established it as a key contributor to world economic expansion. Following a spike in FY2022-23, headline inflation has subsided, and employment has increased above pre-pandemic levels. The majority of the industry is unofficial, although formalization is increasing, indicating a strong financial sector that has been mostly untouched by the global financial crisis.

Political stability for growth and investment

The article also emphasizes how India served as the host of G20 presidency in 2023, highlighting the country’s contribution to the advancement of multilateral policy agendas internationally. The paper states that “Globally, India’s 2023 G20 presidency has demonstrated the country’s important role in advancing multilateral policy priorities.”

According to the IMF assessment, India has the potential for stronger growth with more labor and human resources if comprehensive reforms are put into place as the nation gets ready for general elections in April 2024.

Choueiri underlined the need of political stability for growth and investment, citing studies that highlight the requirement for an open and stable regulatory framework.

While the government has been lauded for its efforts to improve the business climate—which include implementing the single national window—more has to be done to reduce administrative burdens in certain areas.

“It’s a glass half full,” she said, acknowledging that more significant processes are still required to make things simpler.  “But there are important steps that were taken. For example, the single national window, the one-stop shop for companies is a very important one. But still, in many states, there’s a lot of bureaucracy that needs to be tackled and streamlined and a lot of red tape. So this is also a work in progress that needs to be continued.”

“India has an abundance of labor”

The IMF promotes labor reform in India by highlighting the country’s vast untapped labor potential and the need for coordinated initiatives in the areas of education, skill development, and female labor force participation. According to Choueiri, “India has an abundance of labor.” Additionally, India does not make the best use of labor. Therefore, in our opinion, a highly concentrated effort is needed to ensure that India’s advantages and demographics are fully used.

When speaking about hazards, Choueiri brought up the challenging outside world and the possible medium-term risks associated with climate change. She stressed that in order to guarantee India’s continuous prosperity, these risks must be properly managed.

Although India was doing well and had a lot of promise, she issued a warning, noting that in order to realize that potential, a number of crucial laws needed to be changed.

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