India Shines as Global Growth Dynamo, Surpassing 16% Contribution: IMF Report

India, fueled by robust economic reforms in pivotal sectors like digitization and infrastructure, stands out as a global growth powerhouse, poised to contribute over 16% to the world’s economic expansion, as per the latest report from the International Monetary Fund (IMF) on Monday.

Speaking to PTI in an interview, Nada Choueiri, the Mission of India at IMF, emphasized India’s sustained and vigorous growth, making it a leading performer among peer nations. With a focus on prudent macroeconomic policies, the IMF’s annual Article IV consultation with India predicts the country to be among the fastest-growing major economies globally this year.

While global challenges persist, including a slowdown in worldwide growth, Choueiri acknowledged the Indian government’s proactive approach in bolstering infrastructure and logistics. She highlighted India’s immense potential for robust growth, driven by its large, young, and expanding population, provided structural reforms are effectively implemented.

The IMF report commended India’s rebound from the pandemic, positioning it as a key driver of global growth. Headline inflation has moderated, employment has surpassed pre-pandemic levels, and the informal sector continues to dominate while formalization progresses. The financial sector remains resilient, though fiscal buffers need replenishing.

The IMF recommended key policy priorities, including fiscal buffer replenishment, price stability, financial stability maintenance, and inclusive growth acceleration through comprehensive structural reforms while ensuring debt sustainability.

Noting India’s impressive GDP growth at 7.2% in fiscal 2022/23, supported by robust consumption and strong investment, the report highlighted the role of services export growth and the resilience of the economy in the face of global demand shifts.

Choueiri stressed the importance of political stability for investment and growth, highlighting the need for a transparent and predictable business environment. While acknowledging positive steps taken, such as the single national window, she emphasized the ongoing work needed to simplify procedures and reduce bureaucracy.

On labor reform, the IMF underscored the need for India to fully utilize its abundant labor force through concerted efforts in education, skilling, and increasing female labor force participation.

In addressing external risks, Choueiri pointed to the tricky global environment and highlighted medium-term risks from climate change. While acknowledging India’s resilience and potential, she emphasized the importance of managing risks properly and addressing key policies to harness India’s full potential.