IMF Calls India "Star Performer": Infrastructure Push Benefitting, Projects 16 Per Cent Contribution To Global Growth

The International Monetary Fund (IMF) acknowledged India as a "star performer" on Monday (18 December), predicting that it will account for over 16 per cent of global growth. The IMF noted that India has been experiencing robust growth, but also highlighted the global economic challenges it is currently confronting.

In a statement to news agency PTI, Nada Choueiri from the Indian Mission at the IMF noted, “What we have been observing for quite some time now is that India has been growing at a very robust rate. It's one of the star performers when it comes to real growth when you look at peer countries. 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.”

According to the IMF's yearly Article IV consultation with India, the country's economy is poised to be among the world's rapidly developing major economies, thanks to sound macroeconomic policies. Nonetheless, India is also grappling with international challenges such as a worldwide economic slowdown, as stated by Choueiri.

Choueiri underscored the elements that benefited India, such as the government's drive for infrastructure and logistics investments, a substantial and expanding population, and structural modifications including digitalisation.

In its yearly report, the IMF suggested prioritising the restoration of fiscal buffers, ensuring price stability, preserving financial stability, and speeding up inclusive growth.

The IMF reports that India's economy has bounced back robustly from the pandemic, with a decrease in headline inflation and employment levels exceeding those before the pandemic.

The informal sector is also continuing to become more formalised. The financial sector has shown resilience, the budget deficit has lessened, but the public debt is still high. The IMF also emphasised the need for rebuilding fiscal buffers.

In the realm of politics, it is anticipated that general elections will take place in April 2024. The report indicated that macroeconomic strategies have somewhat followed previous recommendations from IMF staff. Choueiri noted that although there isn't any quantitative analysis available, numerous studies have already highlighted the significance of political stability and a well-defined policy environment.

Choueiri noted that, despite numerous steps being implemented to foster a conducive business environment, many states continue to be burdened by substantial bureaucracy and an abundance of red tape.

The IMF has stated that if India undertakes comprehensive reforms, it could potentially enjoy increased growth, driven by additional labour and human capital.

"India possesses a wealth of labour, yet it's not being fully utilised. Therefore, we believe there should be a dedicated push to fully leverage India's demographic benefits," stated Choueiri. He further emphasised the need for education, skill development, and enhanced participation of women in the workforce.