India remains world's largest growing economy, says IMF

India's economy projected to grow at 7% in FY24-25, with focus on job creation, trade liberalization, and infrastructure development.

India remains the largest growing economy in the world, a senior official from the International Monetary Fund said, observing that the country's macroeconomic fundamentals are good.

"India is said to remain the largest growing economy in the world. We project growth at seven per cent in FY24-25, supported by a recovery in rural consumption, as there have been favourable harvests. Inflation is expected to decline to 4.4% in FY24-25, despite some volatility as food prices normalize," Krishna Srinivasan, Director for the IMF Asia Pacific Department, said in an interview on Tuesday (October 22, 2024).

In terms of other fundamentals, he said, "despite elections, the fiscal consolidation remains on track. Reserve position is pretty good. Macro fundamentals, generally speaking, for India are good".

He suggested that the country's reform priorities post-elections need to be in three areas.

"One is, there's an issue about creating jobs in India and so on. In that context, I think implementing the labour codes, which were approved in 2019-2020, are important because they will allow the labour markets to be flexible while giving social protection to workers," he said.

"The other thing is, if you want to be competitive, you also have to remove some of the trade restrictions you have right now. Because in India what's happening is, you know, when you liberalise trade, you allow the productive firms to survive. There's greater competitiveness and that by itself can, you know, create jobs. I think it's important that there's more trade restrictions removed," he said.

"And finally, I would say continue with the reforms on, you know, beefing up the infrastructure, be it physical infrastructure or digital infrastructure, and this is a key achievement, and it continues with that. But going beyond that, I would say you have to focus on agriculture and land reforms. You have to think in terms of strengthening education and skilling," he said.