The International Monetary Fund on Thursday said the focus on governance and financial inclusion measures taken by the government were positive signs that India was back on the growth track.
In India, the growth was stalled for sometime, but the measures taken by the new government started showing signals of growth, it said.
“We see a positive outlook for India. Last year, the growth rate was 4.7 per cent, and in the current year it would be around 5.6 per cent. With the new government’s initiatives, we believe the growth rate next year would be even more,” said Ratna Sahay, Deputy Director (Strategy, Planning and Coordination), Monetary and Capital Markets Department, IMF.
The IMF also said, in India lack of infrastructure was a major hurdle for developmental activities, which the government needed to address for speedy growth.
Commenting on the ‘Make in India’ move by the government, Ms. Ratna said, “It will create jobs, and will generate tax revenues. This will help in reducing the fiscal deficit.’’ The IMF also said the growth outlook was good. However, the country needed more reforms to fuel the growth.
“Though there are positive signs, there are lot of reforms needed to bring inflation and budget deficit down,” she added. Some of the reforms the government should look at would be to improve tax administration, introduction of GST, to get rid of subsidies on fertilizers as well as food and reduce corruption.
“Getting rid of subsidies does not mean ignore the poor. It should be targeted. When the entire country gets bank accounts, it can be facilitated by direct cash transfer. The current account deficit has improved from last year and it will also improve,” added Ms. Ratna.