Confident that the Indian economy is increasingly on a stable footing, the International Monetary Fund (IMF) on Sunday said further progress is required on the long-standing supply bottlenecks and for achieving faster and more inclusive growth.
“We are optimistic about India’s prospects and view the economy being on an increasingly stable footing,” said Kalpana Kochhar, deputy director of the IMF’s Asia and Pacific department.
“Inflation has declined, the current account deficit is in check, international reserves are ample and economic growth is picking up,” she added.
Listing out various positive developments, Ms. Kochhar said a number of important economic and structural reforms have also been initiated.
These include diesel price deregulation, steps to create more flexible labour markets (particularly at the state level), coal sector reforms, adoption of the flexible inflation targeting framework by the Reserve Bank of India (RBI), increasing infrastructure spending, and enhancing financial inclusion, Ms Kochhar said.
“But further progress is needed to relax long-standing supply bottlenecks (especially in the energy, mining and power sectors) and achieve faster and more inclusive growth,” she said.
The IMF has often said that India is among the few bright spots in an otherwise gloomier world economy.
In a recent report published ahead of the G20 Summit, which began in Turkey on Sunday, the Washington-based multilateral institution said India’s growth will benefit from recent policy reforms, a consequent pickup in investment and lower commodity prices.
It also projected a 7.5 per cent growth rate for India in 2016, as against China’s 6.3 per cent.
However, for the current 2015 year, the IMF has projected 7.3 per cent growth rate, which is 0.2 per cent less than its projection made for the year in July.