According to the International Monetary Fund (IMF), India’s macroeconomic environment is “pretty sound” overall, it has a strict fiscal policy, and the central bank acted quickly to contain inflation.
They were financially responsible. This year, they anticipate the fiscal to be 5.9%. To curb inflation, the central bank has acted quickly. In September, the latest current figure was 5%. Therefore, inflation is decreasing. At a news conference on the “Asia and Pacific Region’s Economic Outlook,” Krishna Srinivasan, Director of the Asia and Pacific Department, stated that India’s macroeconomic situation is generally rather sound.
In response to the topic of what type of policy interventions India needs right now to boost growth, he said that considering the considerable potential of India, the nation should consider structural reforms.
“Where I believe the need for structural reforms is if you genuinely want to maximize the huge potential India possesses. Again, India has achieved very good progress in the areas of digitalization and infrastructure expansion, where the efforts have been very impressive. In addition, trade restrictions, the business climate, or the labor situation can alter. All of these work together to create an atmosphere that will promote investor competency more, especially in India. So, he remarked, “I think the key to helping will be structural improvements.
Further, when asked how a large increase in bond yields and the price of crude oil may affect India, an emerging market, and what could be done to protect the financial systems, he advised borrowing “carefully”.
Regarding the rising yields, you said, “I think there — I think this is true for every country, where — when interest rates start rising, I think it’s important to keep in mind that sectors which are heavily leveraged are going to suffer more. This holds true for all of the nations in the region, not just India. It’s crucial to borrow responsibly because of this. And that goes for the public as well as the private sectors,” he pointed out.
In the interim, the IMF recently increased its estimate of India’s GDP growth for the fiscal year 2023–2024 to 6.3%, marking the organization’s second revision upward since its April report.
The growth is anticipated to increase by 6.3% this fiscal year, according to the multilateral agency’s most recent World Economic Outlook report, which was released on Tuesday. This is 20 basis points (100 basis points is equal to 1 percentage point) more than what it had predicted in its previous report.
The IMF ascribed the increased revision in the growth estimate to stronger-than-anticipated consumption from April to June.
The growth estimate has increased from 5.9% in April, 6.1 in July, and now 6.3 percent, bringing it closer to the 6.5 percent forecasted by the Indian government.
The IMF predicted that India’s GDP will rise by 6.3% between 2024 and 2025, which is the same as its previous two predictions.
