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| IMF MD Predicts India Will Continue To Be A Shining Beacon, Adding 15% to Global Growth in 2023 |
New Delhi: The International Monetary Fund's (IMF) Managing Director, Kristalina Georgieva, has praised India's performance in sustaining its growth rate despite the global economic slowdown. According to her, India will alone contribute 15% of the world's growth in 2023, making it a bright spot in the global economy. This has been achieved by leveraging digitalization, which has been a significant driver in overcoming the impact of the pandemic and creating opportunities for growth and employment.
The Indian government has implemented prudent fiscal policies and significant financing for capital investments in the next year's Budget, which has helped sustain the growth momentum. Ms. Georgieva has projected a growth rate of 6.8% for India for the year ending in March 2022 and 6.1% for FY 2023/24. These projections indicate that India's growth rate is the fastest among major economies and signifies its position as a prominent player in the global economy.
Ms. Georgieva's comments are significant as the IMF has projected that 2023 will be a difficult year with global growth slowing down from 3.4% in the previous year to 2.9% in 2023. India's ability to sustain its growth rate during this period demonstrates its resilience and position as a strong performer in the global economy. Furthermore, India's contribution of 15% to global growth in 2023 highlights its growing influence and importance in the world's economic landscape.
Strong Policies
According to Kristalina Georgieva, the IMF's Managing Director, India's fiscal policy has been responsive to economic conditions, which has helped the country sustain its growth rate. India's latest Budget demonstrates its commitment to fiscal consolidation while providing significant financing for capital investments. The country did not shy away from learning from the pandemic and implementing strong policies to overcome the challenging time, which has been an impressive feat.
Ms. Georgieva was impressed by two things in the latest Budget presented by Union Finance Minister Nirmala Sitharaman. Firstly, the Budget places a lot of emphasis on balancing development needs with fiscal responsibility. It is realistic on the revenue side, with a focus on growth-supporting spending. Secondly, the investment in capital expenditures provides the long-term foundation for growth.
In the Budget for FY24, Ms. Sitharaman announced one of the biggest-ever increases in capital spending to create jobs, with capital investment being increased steeply for the third year in a row by 33% to ₹10 lakh crore. This capital spending increase will be the biggest such jump after an increase of more than 37% between 2020-21 and 2021-22. The move signifies India's commitment to investing in its future and building a strong foundation for long-term growth.
Green Economy
Ms. Georgieva praised India's focus on investing in the green economy, including renewables, which has the potential to shift the country towards clean energy and keep the growth momentum going. She also noted that India has taken a brave step with the digital ID, which has provided a foundation for digitalization on the scale seen today. COVID-19 played a role in advancing digitalization as it made it necessary and possible to deliver public support to households and businesses using digital platforms. Ms. Georgieva pointed out that India's public digital infrastructure is built in an agile and welcoming manner, allowing private initiatives to tap into it and benefit themselves as well as support growth and employment in India.
She believes that India's G-20 presidency provides an opportunity for India to share this experience more broadly, especially with the developing world, so that other countries can leapfrog the way India did with a thoughtful approach to digitalization. Ms. Georgieva emphasized the importance of building strong fundamentals, which can withstand the shocks of the pandemic, just as people with strong immune systems are better able to withstand COVID-19. She praised India's progress in revenue collection, tax administration, and efforts to broaden the personal income tax, which has put the country in a much more effective and fiscally better position. Finally, she praised India's efforts to open up space for entrepreneurs, particularly in the digital space.
Women Empowerment
Ms. Georgieva commented that India's impressive results have garnered interest from other countries. She also noted that India has a young population, with 15 million people being added to the workforce every year. When a strong investment climate generates jobs, this is a significant advantage. Furthermore, India has not fully utilized its female workforce in the past. Prime Minister Modi is clear that women can be a driver for India's growth.
Ms. Georgieva emphasized that India needs to ensure that its legal framework is advantageous for women to participate in the labor force, that access to education is equal for women and men, and that attention is paid to women's safety so that they can go to work. She shared her personal experience of riding in a woman-only car on a train in Mumbai and speaking to women who explained how the safety provided to them makes a huge difference in allowing them to work and study. Many of the reforms in India are moving in the direction of taking advantage of the strength of the Indian economy, its youthful population, and the reservoir of talent for innovation.
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