WASHINGTON, Oct 23: India continues to hold its position as the fastest-growing economy globally, according to a senior International Monetary Fund (IMF) official. The country’s macroeconomic fundamentals are considered strong.
“India is expected to remain the world’s fastest-growing economy with a projected growth rate of seven percent for FY24-25. This growth is driven by a recovery in rural consumption due to favorable harvests. Inflation is forecasted to drop to 4.4 percent during FY24-25, though some fluctuations may occur as food prices stabilize,” said Krishna Srinivasan, Director of the IMF’s Asia Pacific Department, in an interview.
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IMF Official Highlights Key Reforms for India: Job Creation, Trade Liberalization, and Infrastructure Development
In discussing India’s economic fundamentals, a senior IMF official remarked that, despite the upcoming elections, fiscal consolidation is progressing well, and the country’s reserve position remains strong. “Overall, India’s macroeconomic fundamentals are solid,” he added.
Post-elections, the official highlighted three key areas of reform. First, addressing the challenge of job creation by implementing the labour codes approved in 2019-2020. These reforms would enhance labour market flexibility while ensuring social protection for workers.
Second, to boost competitiveness, he emphasized the need to reduce existing trade restrictions. “Liberalizing trade enables more productive firms to thrive, fosters competition, and can lead to job creation,” he said.
Third, he urged India to focus on strengthening both physical and digital infrastructure. He also called for expanding reforms in agriculture and land. Additionally, he emphasized investing in education and workforce skilling. This is especially important for the service sector, which can create more jobs if workers have the right skills.
Srinivasan also underscored the importance of strengthening social safety nets and improving the business environment by cutting through red tape. He noted that many investors still face challenges in entering the Indian market, securing land for major investments, and dealing with the complexities of shutting down operations.
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While acknowledging that India’s unemployment rate has dropped to 4.9 percent, he pointed out that the labour force participation rate and employment-to-population ratio are both on the rise. Addressing these reforms, especially around labour market issues, remains critical for India’s growth, he concluded. (PTI)