Indian economy to contribute 15% of global growth in 2023: IMF MD Georgieva

  • For this year, the IMF expects India to retain a high growth rate, 6.8 per cent for the year that ends in March

First Published22 Feb 2023
International Monetary Fund Managing Director Kristalina Georgieva at a news conference.
International Monetary Fund Managing Director Kristalina Georgieva at a news conference.(REUTERS)

IMF or the International Monetary Fund's Managing Director Kristalina Georgieva on Wednesday said that the Indian economy will alone contribute 15 per cent of the global growth this year, as the country continues to remain a relative "bright spot" in the world economy.

In an interview with news agency PTI, the IMF MD said that India's performance has been quite impressive. For this year, the IMF expects India to retain a high growth rate, 6.8 per cent for the year that ends in March.

“For FY 2023/24 (April 2023 to March 2024) we project 6.1 per cent, a bit of slow down like the rest of the world economy, but way above the global average. And in that way, India is providing about 15 per cent of global growth in 2023,” Georgieva said.

That is the fastest growth rate among major economies.

While digitisation pulled out the world's fifth-largest economy from Covid-induced pandemic lows, prudent fiscal policy and significant financing for capital investments provided in the next year's budget will help sustain the growth momentum.

India remains a bright spot

At a time when the IMF is projecting this year to be difficult with global growth slowing down from 3.4 per cent in 2022 to 2.9 per cent in 2023, India remains a bright spot, Georgieva said.

"Why is India a bright spot? Because one, the country has done really well to turn the digitalization that has been already moving quite well into a major driver of overcoming the impact of the pandemic and creating opportunities for growth and jobs," the Managing Director noted.

"Second, because India's fiscal policy has been responsive to economic conditions. We have seen the new budget presented, and it signals the commitment to fiscal consolidation, while at the same time provides significant financing for capital investments. And three, because India didn't shy away to learn the lessons from the pandemic and to implement very strong policies to overcome what has been really a difficult time for a number of months," Georgieva told PTI.

Georgieva on India's latest annual budget

The IMF Managing Director said she is impressed by two things in India's annual budget presented by Union Finance Minister Nirmala Sitaraman on 1 February. "Overall, a very, very thoughtful work done by the Minister of Finance," she said.

The first one, Georgieva believes, is how much care is placed on balancing development needs with fiscal responsibility in India. "So, you have a budget, that is realistic on the revenue side with a focus on growth-supporting spending. And secondly, the investment in capital expenditures, that is there to provide the long-term foundation for growth," she said.

Sitharaman in the budget for fiscal FY24 announced one of the biggest-ever increases in capital spending to create jobs but shunned outright populism in the last full budget ahead of the general election due next year.

Capital investment is being raised steeply for the third consecutive year by 33 per cent to 10 lakh crore.

The capital spending increase, which would amount to 3.3 per cent of gross domestic product (GDP), will be the biggest such jump after an increase of more than 37 per cent between 2020-21 and 2021-22.

"I particularly noticed, how much attention India is paying on investing in the green economy, including renewables with potential to shift the country towards clean energy and keep growth going. What we see as potential for the future is to translate this fiscal responsibility into a medium-term framework that gives even stronger anchor to India's public finances," Georgieva said.

Speaking about the G-20 meet, she added, "And of course, India's G-20 presidency provides an opportunity for India to share this experience, more broadly, especially with the developing world, so other countries can leapfrog the way India, did it with this thoughtful approach to digitalization."

With PTI inputs

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