The Indian economy is one of the bright spots in an otherwise cloudy global economy with the, the head of the International Monetary Fund (IMF) said today.
Speaking in New Delhi, IMF chief Christine Lagarde said that recent policy reforms by the Narendra Modi government have resulted in improved business confidence which would boost growth.
Ms Lagarde added that the government’s latest budget was “a step in the right direction”, and singled out higher infrastructure spending for praise.
“A brighter future is being forged right before your eyes,” she said.
“By 2019, the economy will more than double in size compared to 2009. When adjusting for differences in purchase prices between economies, India’s GDP will exceed that of Japan and Germany combined.
“Indian output will also exceed the combined output of the three next largest emerging market economies—Russia, Brazil, and Indonesia. So clearly India’s weight among the group of emerging markets will increase.”
Ms Lagarde said India was on course to overtake China by 2030 as the most populous country in the world, with the largest labour force. In comparison, the Chinese government expects the country to grow by “approximately 7pc” .
The IMF, in its latest forecast last week, said it expected the Indian economy to grow by 7.5 percent in the 2015/16 fiscal year starting on April 1, below the government’s own forecast.
But to anchor long-term growth and employ a workforce that will grow to become the world’s largest by 2030, India needs to open up its labour market to women, boost financial inclusion and invest even more in infrastructure, she said.
Lagarde cited a new IMF working paper which found that only 33 percent of women in India worked – below the global average of 50 percent and the average in East Asia of 63 percent.
Not only is female participation in the labour force low, but it has been declining since 2005.
Lagarde called this a “huge missed opportunity” and said that urgent remedies were required.