India’s strong performance an opportunity for reforms to achieve advanced economy status by 2047: IMF

Commending India’s “prudent” policies, the International Monetary Fund’s (IMF) Executive Board has said its strong economic performance can help it adopt critical reforms to achieve advanced economy status by 2047.

A report after the IMF’s annual consultations with India said its "strong economic performance provides an opportunity to advance critical and challenging structural reforms to realise India’s ambition of becoming an advanced economy by 2047”.

Prime Minister Narendra Modi has set the deadline of the centenary of India’s Independence for it to become a developed nation.

The report released on Thursday said, “Executive Directors commended the authorities’ prudent macroeconomic policies and reforms, which have contributed to making India’s economy resilient and once again the fastest-growing major economy”.

“Looking ahead”, the report said, “India’s financial sector health, strengthened corporate balance sheets, and strong foundation in digital public infrastructure underscore India’s potential for sustained medium-term growth and continued social welfare gains”.

“Directors stressed that in the face of headwinds from geoeconomic fragmentation and slower domestic demand, continued appropriate policies remain essential to maintain macroeconomic stability”, the report added.

The report said that IMF directors welcomed India’s recent tariff reductions, and noted that these “can enhance competitiveness and foster India’s role in global value chains”.

In the budget presented last month, Finance Minister Nirmala Sitharaman reduced tariffs on a range of imports, from automobiles to liquor, and more may be coming.

For accelerated growth, the Executive Board said comprehensive structural reforms are needed as they are crucial to creating high-quality jobs, and invigorating investment.

“Efforts should focus on implementing labour market reforms, strengthening human capital, and supporting greater participation of women in the labour force”, the report said.

To boost private investment and foreign direct investment (FDI), “stable policy frameworks, greater ease of doing business, governance reforms, and increased trade integration”, are necessary the report said.

Besides labour market reforms, "supporting greater participation of women in the labor force” was necessary, the report noted.