India will remain the world’s fastest-growing economy as the country begins reaping the rewards of the ongoing structural reforms, according to Ranil Salgdo, the IMF’s mission chief for India.

Solgado described India’s $2.6 trillion economy as an elephant that is starting to run. Growth of the world’s sixth-biggest economy is expected to soar to 7.3 percent in the current fiscal year, ending in March 2019, and 7.5 percent next year. The current pick-up reportedly follows a drop to 6.7 percent in the previous fiscal year. Meanwhile, inflation has edged higher, in part due to a reduction of economic slack.

According to the Washington-based institution, India makes up 15 percent of the entire global growth. At the same time, the IMF called on governors of Asia’s third-largest economy for action to a) curb inflation and b) increase the number of females in the workforce.

The fund expects India to see a “broadly positive outlook”to “strengthening investment and robust private consumption,” but expressed concerns over risks tied to a) higher fuel prices and the b) weakening national currency.

Among the reforms implemented by Prime Minister Narendra Modi’s government, the IMF highlighted the introduction of a nationwide goods and services tax in 2017, which replaced dozens of state and national taxes. However, the IMF urged further improvement in the country’s tax system and continued reforms.

The IMF called for tackling crippling debts at Indian public-sector lenders, as well as relaxing regulations on foreign direct investment that would have a positive impact on the economy.

“India would benefit from further liberalization of trade and foreign investment,” the reports said.

To sustain and build on these policies and to harness the demographic dividend associated with a growing working-age population (which constitutes about two-thirds of the total population), India needs to reinvigorate reform efforts to keep the growth and jobs engine running. This is critical in a country where per capita income is about $2,000 U.S. dollars, still well below that of other large emerging economies.

Source: IMF news

Edited by Simrita Dhillon.