IMF flags slow pace of reforms in six core areas in India

BEIJING: Listing out as many as six core areas that need further reforms in India, the International Monetary Fund (IMF) has warned that headwinds from weaknesses

BEIJING: Listing out as many as six core areas that need further reforms in India, the International Monetary Fund (IMF) has warned that headwinds from weaknesses in the country’s corporate and bank balance sheets, decelerating pace of reforms, and sluggish exports may weigh on its economic growth.

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The IMF, which recently lowered its GDP growth projection for India to 7.4% for 2016-17, said the country’s “economy is on a recovery path, helped by lower oil prices, positive policy actions and improved confidence” in its ‘Note on Global Prospects and Policy Challenges’.

The key areas where IMF has recommended further reforms for India include product market, labour, infrastructure, banking, legal system and property rights, and fiscal structural reforms. At six, India lagged in reforms in more sectors than China, Brazil and South Africa.

For China and South Africa, the IMF has recommended further reforms in five key areas each, while it is higher at seven for Russia. For Brazil, it is three areas.

Out of the total nine ‘reform priorities’ taken under consideration by the IMF for various countries, India did well on innovation, capital market development and trade and foreign investment liberalisation.

About India, the IMF also said further steps to relax long-standing supply bottlenecks (especially in energy, mining, and power sectors). as well as labour market reforms, are crucial to achieving faster and more inclusive growth.