India a 'bright spot' in a gloomy world economy: IMF chief

India on Monday was hailed as the one bright spot in an otherwise gloomy global economy by International Monetary Fund (IMF) chief Christine Lagarde.

Maintaining that the global economy is still in the process of recovery from the 2008-2009 financial crisis, Lagarde said at the start of her two-day visit that India was on course "to become a key engine for global growth".

"More than six years after the global financial crisis, the recovery remains too slow, too brittle, and too lopsided," Lagarde said in a speech in New Delhi ahead of talks with Prime Minister Narendra Modi later Monday.

"We have pared down our forecasts of global growth since last October, despite the boost from cheaper oil and stronger US growth. And, while the global economy is expected to grow by 3.5 percent this year, and 3.7 percent next year, this is still below what could have been expected after such a crisis," Lagarde told an audience of business leaders here.

"In this cloudy global horizon, India is a bright spot," she added.

Since Modi came to power last May, inflation has fallen to around five percent while revised gross domestic product (GDP) data has put growth for the current financial year at 7.4 percent, meaning Asia's third largest economy is now outpacing China.

Lagarde also described the government's first full budget as striking "a good growth-equity balance".

Prime Minister Modi was also praised for launching his "Make in India" initiative to attract foreign investments.

However, she said that the current government would need to do more to facilitate the flourishing of an open and competitive business environment.

"Much needs to be done in easing land acquisition, expediting clearances, and establishing a stable regulatory regime so that the private sector can invest. These issues are on the radar of policymakers, which is promising, they must be on the action list," she said.

Lagarde is visiting New Delhi and Mumbai for talks with the Indian leadership and captains of Indian industry.