India to contribute 15% of global growth in 2023, says IMF
India is a “bright spot” in the world economy, and will contribute 15% of global growth in 2023 by itself, according to International Monetary Fund (IMF) Managing Director Kristalina Georgieva.
She said prudent fiscal policy and significant financing for capital investments provided in the Budget will help drive growth momentum.
“India’s performance has been quite impressive. For this year, we expect India to retain a high growth rate, 6.8% for the year that ends in March. For FY 2023/24 (April 2023 to March 2024) we project 6.1%, 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% of global growth in 2023,” Georgieva told the Press Trust of India news agency.
That is the fastest growth rate among major economies, she said.
“Why is India a bright spot? Because one, the country has done really well to turn the digitalisation 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,” she said.
“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,” she said.
Georgieva said she was impressed by two things in the latest annual Budget presented by Union Finance Minister Nirmala Sitaraman. She said: “The first one 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.”
The capital spending increase, which would amount to 3.3% of gross domestic product (GDP), will be the biggest such jump after an increase of more than 37% between 2020-21 and 2021-22.
The IMF’s MD praised the government for its focus on the green economy, including renewables with potential to shift the country towards clean energy and keep growth going.
She also highlighted India’s “a very brave step with the digital ID that laid the foundation for digitalisation on the scale we see today”. She said the pandemic was a catalyst for advancing digitalisation because it made it both necessary and possible to deliver public support to households and to businesses using digital platforms.
“What is unique about India is the fact that this public digital infrastructure is built in a very agile and welcoming manner. So private initiatives can tap into this public infrastructure and benefit themselves as well as support growth and employment in India. What is replicable is this concept of open, holistic approach to digitalisation using key building blocks.”
Encouraging enterprise for global growth
The IMF chief was full of praise for the government’s support for entrepreneurs. “I cannot praise enough what India is doing to open up space for entrepreneurs. That is visible in the digital space. India put in place public digital infrastructure that is so well attuned for private initiatives to blend in to take advantage of this infrastructure,” she said.
The results are not only impressive for India but also have generated interest from other countries as well, she said. “And last but not least, India does have young population – 15 million people are added to the labour force every year. When you have strong investment climate that generates jobs, that is a great advantage.”
