Calling India a bright spot in the cloudy global economy, International Monetary Fund (IMF) chief Christine Lagarde on Monday said reforms in subsidy and labour market and a stable regulatory regime was necessary to boost private investments in the country.
“Today, the elements are all aligned to make India a global powerhouse. This is India’s moment. Seize it. Chak De India!” she said while speaking at a function at Lady Shriram College.
“In this cloudy global horizon, India is a bright spot. Recent policy reforms and improved business confidence have provided a booster shot to economic activity,” Lagarde said.
India also looks set to outpace populous neighbour China as the world’s fastest growing major economy this year, she added.
Lagarde, who is on a two-day visit to India, met Prime Minister Narendra Modi and finance minister Arun Jaitley on Monday.
Modi asked for greater representation for Indians at the higher level at IMF, particularly at the deputy MD level. The Prime Minister said his focus, while promoting growth, is also to create jobs, promote inclusive growth, and focus on development of backward regions in eastern and north-eastern India.
Complimenting the government on its economic revival measures, Lagarde said the results are visible and India’s growth rate has crossed 7.5%.
During her meeting with Jaitley that lasted for over an hour, issues relating to the Indian and the global economy and key priorities of the government, besides the IMF quota that would facilitate larger roles of emerging economies at the multilateral institution, were discussed.
Jaitley also said that the Indian economy was fundamentally strong.
Jaitley and Lagarde also agreed to jointly host a high-level conference on “Advancing Asia: Investing for the Future” in March, 2016 in India.
Stating that “we at IMF were fairly confident of India’s new (revised) GDP data, Lagarde said the budget announced by Jaitley was “a step in the right direction.” According to the IMF, India’s GDP is expected to grow 7.5% in 2015-16.
On India’s new monetary policy framework, which makes inflation targetting RBI’s priority, Lagarde said it “should provide a robust institutional foundation for maintaining price stability.”
Implementation of the goods and services tax, subsidy and labour market reforms, easing land acquisition and a sound monetary policy framework to keep inflation under control was critical, she added: “Those reforms are bold but we need resilient implementation.”
Growth can’t be your only goal, but welfare of people… your objective should be inclusiveness. That way you won’t have cycles of ups and downs.”
Lagarde also said that issues of inequality and gender diversity needed to be addressed for sustained growth. “My definition of inclusiveness includes women and includes everybody.”