India has emerged as “a bright spot” when the world is facing imminent prospects of a recession, the chief economist of the International Monetary Fund (IMF) said, however, India needs key structural reforms in order to achieve the ambitious target of being a USD 10 trillion economy.
Pierre-Olivier Gourinchas, chief economist of the IMF said: “Well, India is, I want to say, sort of bright light. The Indian economy has been doing reasonably well.” In its World Economic Outlook on Tuesday, the IMF projected a growth rate of 6.8 percent in 2022 as compared to 8.7 percent in 2021 for India. The projection for 2023 slides down further to 6.1 percent, he noted.
When asked about the ambitious goal of India becoming a USD 10 trillion economy, Gourinchas said that he certainly believes this is achievable. “I mean, we've seen a number of countries grow at very fast rates in the past and really develop very rapidly. So, I think it's certainly, now it's not necessarily an easy task, but I think, yes, there is certainly an enormous potential for an economy like India,” he told PTI in an interview.
To do so, India needs to carry out a number of structural reforms, he observed. “Well, there are certainly a number of structural reforms that are or improvements are needed in the economy like India. There have been a number of reforms already,” he said. For instance, India is very much at the forefront of digitalisation, he said.
"The way these digital tools can be deployed to improve financial inclusion or to facilitate access to administrative services, and things like that. And that is a testimony to the sort of innovation in that sector that is happening in India," he observed.
“But beyond that, there are needs for reforms that will actually boost potential growth. It's not just about stabilising the economy around the potential growth that it has right now. In order to unleash India's potential, a lot of reforms have to be implemented that will boost productivity growth,” Gourinchas told PTI in response to a question.
“Here, of course, we can think about improvements on the health side, we can think about improvements on the education side, social spending, digital literacy and access, we can think about infrastructure,” he suggested.
“There is a range of areas where, you know, public infrastructure broadly defined, not just in terms of buildings and roads, but also investing in human, investing in people and human capital, health, education, etc. Is going to help the economy really, really grow very fast on a continuous basis,” said the IMF chief economist.
In response to a question, the chief economist said the Indian economy had rebounded from the pandemic downturn. The slowdown between 22-23 is going to be reflecting basically, the fact that the global economy is also slowing down and that the external factors are going to reflect on today's economy, high energy prices, the slowdown in external demand and the weakening of global confidence in general, he stressed.