IMF’s ‘India Mission Chief’ c. NADA said the fundamentals of India’s economic growth rate are strong. Half of the world’s growth in the current financial year has come from India and will continue to do so. However, due to unfavorable external conditions, the growth rate will be moderate rather than as much as expected. Yet India’s place on the economic map will remain bright.
NADA also said that the IMF’s forecast for India’s economy is better than previous forecasts. But at the same time NADA warns, the risk of unfavorable situation in the international arena remains. The level of that risk appears to be higher than what was feared. As a result, there is a possibility of economic slowdown all over the world. Many fear that the US government may officially declare a recession next year. Because of that, naturally, this externality will have a negative impact on the Indian economy as well. Especially commercial transactions are likely to be disrupted as a result.
Similarly, the Russia-Ukraine War will become a cause of concern. NADA said there is a risk that the intensity of the war between the two countries could escalate and the extent of disruption to the global supply chain would further increase. “Inflation can dampen domestic demand and have a serious impact on economically weaker sections. But hopefully, the dramatic improvement in broad-based reforms and digitization can propel growth in the medium term,” says Nada.
According to the IMF report, India needs to focus on reforms at the micro-economic level due to the external environment. Special policies or strategies should be adopted so that marginalized people do not face problems. The IMF’s report also emphasized on meeting medium-term objectives. At the same time, priority has been given to increasing investment in education, health and infrastructure sectors.