Krishna Srinivasan, Director of IMF Asia & Pacific Department, has stated that India’s contribution to global economic growth will increase from its current 16% to 18% within the next five years. He emphasized that India’s rapid economic growth is a significant factor in this rise.
Positive Outlook for Asia Pacific Region
Despite global challenges, the Asia Pacific region is anticipated to remain a bright spot in the global economy. Srinivasan highlighted that the region’s economy is expected to grow by 4.6% in 2023 and 4.2% in 2024. This growth trajectory positions the region to contribute approximately two-thirds to the global economic expansion.
India’s Economic Strength
Srinivasan underlined the robustness of India’s economy, projecting a growth rate of 6.3% for the fiscal year 2023/24. This growth is supported by strong government capital expenditure, increasing private sector investments, sustained consumption growth, and despite weakening external demand.
Fiscal Management and Inflation Trends
India’s fiscal deficit target of 5.9% for FY24 is expected to be met by the central government. Srinivasan mentioned that while there is higher expenditure in certain areas like additional LPG subsidy and increased MNREGA expenses, the budget can accommodate these unexpected increases. He also noted a moderation in India’s retail inflation, which has returned within the Reserve Bank of India’s tolerance band.
IMF’s Policy Recommendations
In its policy message for the Asia Pacific region, the IMF urged countries to maintain a restrictive monetary policy stance until inflation stabilizes. Additionally, the IMF emphasized the importance of fiscal consolidation, implementation of macroprudential policies to address financial sector vulnerabilities, tackling rising inequality, and facilitating the green transition.