Christine Lagarde, Managing Director of the IMF, has labelled India a “bright spot” in the “cloudy global horizon” following predictions that India’s economy will expand by 7.2 percent in the current fiscal year. This is up from 5.6 percent as earlier predicted and will grow to 7.5 percent in the coming year, up from a predicted 6.3 percent. This forecast by the IMF was adjusted in response to the Indian government’s recent revision for estimating GDP and shows that, at its current pace, the country is on course to become the fastest growing economy in the world.
The country is on course to become the fastest growing economy in the world
Speaking at Lady Sri Ram College in New Delhi, Lagarde said: “By 2019, the economy will more than double in size compared to 2009. When adjusting for differences in purchase prices between economies, India’s GDP will exceed that of Japan and Germany combined. Indian output will also exceed the combined output of the three next largest emerging market economies – Russia, Brazil, and Indonesia.”
The IMF chief lauded Narendra Modi’s government for taking steps to steer the economy towards a higher growth trajectory through continued commitment to lowering their budget deficit and upgrading the country’s roads, railways and power lines. India’s proposal to commit the central bank to a formal inflation target to “provide a robust institutional foundation for maintaining price stability” was also praised by Lagarde.
While stating that policy reforms and improved business confidence have boosted India’s economic activity, she highlighted increasing financial inclusion, unleashing the potential of women, and investing in infrastructure as three main priorities. Lagarde focused on the need for stronger economic frameworks to establish a more resilient economy, calling for sound monetary policies and a healthy financial sector to support fiscal growth.