The International Monetary Fund (IMF) on Thursday said that India’s economic fundamentals remain “pretty strong” with lower inflation and “well-managed” fiscal deficit.
“India continues to be the fastest-growing major, major economy. We have India going at 6.6% this year. If you look at India's fundamentals…pretty strong. Growth is good…Inflation is coming down. Fiscal deficit...well-managed. So, there are many things which are working in India's favour, said Krishna Srinivasan, the Director of the IMF’s Asia and Pacific Department.
He added that despite 50 per cent US tariffs, India’s growth rate is expected to remain steady due to the recent GST reforms, which “will provide a filip to consumption. They'll improve domestic demand.”
However, Srinivasan emphasised that a trade deal with Washington would help New Delhi’s future growth prospects.
“If India reaches a trade agreement with the US, when tariffs are lower, there's an upside potential to growth next year,” he noted.
On the issue of the purchase of Russian oil, Srinivasan said that “diversification of export markets is always good so that you insulate yourself from the shocks.”
The IMF Managing Director, Kristalina Georgieva, also said on Thursday that India has pursued “very significant reforms” in its economy and the country “substantially” contributes to global growth.
“India is one of the fastest-growing economies, and given its size, it contributes to global growth substantially. India is where it is because it has pursued very significant reforms, tax reform, investing in infrastructure, digital infrastructure, but also road connectivity in the country, and that has injected this growth potential,” she added.
The IMF on Tuesday raised India’s growth projection to 6.6 per cent, an upward trend of 0.2 percentage points, in its latest Global Economic Outlook report.
According to the report, India’s strong growth in the first quarter of 2025 is “offsetting” the US tariff increase on its imports to the country.
“In India, growth is projected to be 6.6 per cent in 2025…Compared with the July WEO update, this is an upward revision for 2025, with carryover from a strong first quarter more than offsetting the increase in the US effective tariff rate on imports from India since July,” the report said.
Picture Courtesy: IANS
