India is IMF's star performer but its report isn’t all glowing

The IMF noted that our digital public infrastructure has significant potential to help raise total factor productivity.
The IMF noted that our digital public infrastructure has significant potential to help raise total factor productivity.

Summary

  • Robust GDP growth and capital spending amid a fiscal pullback earned the country praise even as our currency’s managed float drew adverse commentary.

The International Monetary Fund’s (IMF) latest commentary as part of its annual Article IV consultation should give policymakers cause for cheer. Not only does it paint an optimistic picture of India’s economy, but Indian policies have received praise, too. 

While noting the robust growth of gross domestic product (GDP), Nada Choueiri, mission chief for India at the IMF, calls India a “star performer" that is seen accounting for more than 16% of global growth this year. The government’s focus on capital spending even as the budget is tightened has been lauded, as has our digital public infrastructure, which the IMF notes has significant potential to help raise total factor productivity. Still, the external environment poses some challenges, climate change among them. While labour and human capital reforms could enable faster growth, some of these would be tricky to implement. Though the government took a jab at it, political pitfalls meant it had to slow its approach. Now, with elections nearing, another attempt seems unlikely anytime soon. 

Yet, since labour market rigidities are a drag, we must act at some point. At the very least, a wide public debate on what’s needed must get underway.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
more

MINT SPECIALS