India’s macroeconomic environment sound, but structural reforms needed: IMF

While India’s overall macroeconomic environment is “sound”, the country needs structural reforms that could further aid the business environment, a top official of the International Monetary Fund (IMF) said, while briefing reporters at the sidelines of IMF-World Bank annual meeting in Marrakech, Morocco on October 14.

“Where I think in terms of if you want to really exploit the significant potential India has, then I think the need is for structural reforms. Again, there India has made significant strides, very impressive strides, in the area of digitalization and beefing up infrastructure where the efforts have been truly impressive,” news agency ANI quoted Krishna Srinivasan, Director of the Asia and Pacific Department, IMF, as saying.

“…there could be reforms aimed at improving the business environment, labor reforms, removing trade restrictions. All these go into building an environment which will support investor competence more — more so in India. So, structural reforms will be the key in supporting, I think,” he added.

Srinavasan also lauded the Reserve Bank of India (RBI) for acting expeditiously to control inflation, even as the major world economies continue to battle the surge in prices.

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“They have been fiscally disciplined. They expect the fiscal at 5.9 percent this year. The central bank has moved fast to bring inflation under control. The most recent number was 5 per cent (for September). So, inflation is coming down. So, overall, the macroeconomic environment is pretty sound in India,” he said.

Meanwhile, the IMF on October 10 made an upward revision in its fiscal year 2023-24 growth forecast for India. The country is likely to grow at 6.3 percent, instead of 6.1 percent as projected in the previous forecast, it said.

Earlier, the World Bank on October 3 retained India’s growth forecast at 6.3 percent, citing the robust services activities. In September, the Asian Development Bank (ADB) also predicted India to grow at 6.3 percent in the forecast released last month.