Gita Gopinath, International Monetary Fund's first Deputy Managing Director, on Tuesday said the global financial agency is in the process of revising India’s FY24 GDP growth forecast upwards by end of January.
Speaking to Rahul Kanwal, Business Today's Executive Director, Gopinath spoke about IMF's earlier estimate of India's FY24 growth at 6.3% as against Reserve Bank of India's estimate of 7.4%.
"We are putting our January update towards end of this month and then we are in the process of revising up. I think India had a very strong first half of FY24 and for the second half, we're seeing more slowing. That's not unexpected, given that there was much front loading of public investment and we're also seeing some softening and consumer spending. But we will be revising up," said Gopinath.
Gopinath said that the Indian economy has done better than the IMF estimated at the beginning of FY24.
"At first I think we should recognise that the Indian economy is doing well. If you look at major economies, it remains one of the fastest growing economies and and we expect that will be true even in 2024. Huge progress has been seen in two areas, physical infrastructure like roads, ports, airports and so on, and also digital infrastructure. I think both of those have been areas of remarkable progress and that is beneficial to everybody. I mean, it's not just very rich, it affects all parts of society. We're also seeing consumption growth to be doing quite well, though expected to slow going forward.
"Yes, the government's public investment push has played a very important role. But again, I think India also needs much more reforms for it to be able to truly realise that potential and make sure that everybody, including youth unemployment, is reduced. Concerns about the K-shaped recovery are addressed in terms of specific reforms, for instance, financial access to medium, small and micro enterprises. I think it's still an area where more work is needed, like more credit growth to that particular sector is needed on that front. Labour market reforms that needed female labour force participation is incredibly low. More needs to be done to bring that up." said Gopinath.
Gopinath said that India is one of the fastest growing economies of the world, but it needs to keep up with "consistent reforms". The IMF official also spoke about what kind of reforms she expected from the new government after the 2024 general elections.
"Firstly, continue the good investment that's been done in public infrastructure, including digital public infrastructure. Obviously that's not done. Much more is needed. Continue that good work and is shown to bring in a lot more activity. Labour market reforms is important and female labour force participation is important, credit to MSMEs is an important area, land reforms are also critical, agricultural sector reforms," she said.