India largest growing economy: IMF lists 3 focus areas for growth reforms

IMF Asia Pacific Department Director Krishna Srinivasan suggested that India's reform priorities should be in three areas: Jobs, existing trade barriers, and infrastructure sector

India is poised to remain the fastest-growing economy in the world, with the International Monetary Fund (IMF) projecting a robust 7 per cent growth rate for the financial year 2024-25.

IMF Asia Pacific Department Director, Krishna Srinivasan, said on Tuesday that India’s growth trajectory will be supported by positive macroeconomic fundamentals, recovery in rural consumption, and easing inflation, which is expected to decline to 4.4 per cent during this period.

Speaking to news agency PTI, he also highlighted three main focus areas for India to support further growth outlook. “...Despite elections, the fiscal consolidation remains on track. The reserve position is pretty good. Macro fundamentals, generally speaking, for India are good,” he said.

Srinivasan further suggested that reform priorities should be in three areas: Jobs, trade barriers, and infrastructure. According to Srinavasan, in the context of jobs creation, focusing on implementation of labour codes, which were approved in 2019-2020, are important. “...They will allow the labour markets to be flexible while giving social protection to workers,” he said.

He further said that to be competitive, India could consider removing some of the trade restrictions that are in place at present. “When you liberalise trade, you allow the productive firms to survive…,” he said, explaining that this boosts competitiveness and that by itself can create jobs.

He said it was important to continue the reform measures in the sector of infrastructure. Srinivasan noted that development of both physical and digital infrastructure was a key achievement but focus also needs to be on agriculture and land reforms. “You have to think in terms of strengthening education and skilling,” he emphasised. Improving the business environment, labour force participation of women, and youth unemployment are some other key concerns.