India Needs To Invest In Education, Healthcare To Continue As Fastest-Growing Economy Globally, Says IMF Official

The International Monetary Fund in its latest World Economic Outlook edition said that India is estimated to grow at 6.8 per cent FY24 and maintain a growth rate of 6.5 per cent in FY25

Further, the official pointed out that India needs to work on improving the business environment and liberalising the trade regime to help the economy grow

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India needs to invest in education and healthcare to continue growing as the fattest economy in the world, Krishna Srinivasan, Asia & Pacific Director, IMF said on Saturday. The International Monetary Fund in its latest World Economic Outlook edition said that India is estimated to grow at 6.8 per cent for the 2023-24 fiscal year (FY24) and maintain a growth rate of 6.5 per cent in the current 2024-25 fiscal year (FY25). 

Notably, the last outlook from the IMF placed the country’s growth rate at 6.5 per cent for FY24. This improvement in the estimates has been lately attributed to a strong domestic economy. Speaking with ANI about the Indian economy and its performance, Srinivasan said, “India has successfully navigated multiple shocks we've seen in the recent past, starting from the pandemic to the war in Ukraine and then the recent tensions in the Gulf. Growth at 6.8 per cent in 2024-25 is a very impressive number.”

#WATCH | Washington DC, US: On the Indian economy and its performance, IMF Asia & Pacific Director Krishna Srinivasan says, "India has successfully navigated multiple shocks we've seen in the recent past, starting from the pandemic to the war in Ukraine and then the recent… pic.twitter.com/zciKwavdWa

— ANI (@ANI) April 20, 2024

Risks For Growth

The IMF official noted that this growth was ‘largely led by private consumption and public investment’. Commenting on the near-term risks for the economy, he said, “If I were to think about the short-term risks, I would say its the volatility in the commodities market, especially given the recent tensions in the Middle East, and what happens if oil prices go up. So that’s a kind of a near-term risk.” Srinivasan pointed out the climate change and fragmentation posed some challenges for the country as well. 

Reforms Needed

Sharing an outlook and the reforms required, he added, “I don't see any red flags in the near term, but I would highlight one important aspect. Now, India has a young, growing population. India is likely to add about 15 million people to the labor force every year. Now, if you want to benefit from this demographic change, you will need lots of reforms. I think in particular, I would emphasise the need for significant investment in education and healthcare so that this growing labor force can contribute productively to the economy. Also I think its important to ensure that the labour laws which were done so recently are implemented so that the labour markets are more efficient.”

Further, Srinivasan pointed out that India needs to work on improving the business environment and liberalising the trade regime to help the economy grow. He said that other measures needed for the economy include land reforms, agricultural reforms, environment for FDIs, quality of data statistics, among others. The official urged the centre and state players to work in collaboration to help the country move ahead. 

Comparison With China

With the growth rate for China projected at 4.6 per cent for FY24, the IMF in its report noted that India is estimated to remain the fastest growing economy in the world, surpassing China. Commenting on what this means for the whole region, Srinivasan said, “Just to put this into perspective, China is more than four times bigger than India and in that sense, if India is growing faster today than China then it should not be surprised. With that said, this is something the medium-term good prospects for India are pretty good at 6.5%, it can be better than that, but it all impinges on reforms India pursues.”

#WATCH | Washington DC, US: On India maintaining its position as the fastest growing economy in the world, outpacing China and what it means for other countries in the neighbourhood, IMF Asia & Pacific Department Director Krishna Srinivasan says, "Just to put this into… pic.twitter.com/IGP3n0Akaq

— ANI (@ANI) April 20, 2024