Lauding India’s efforts in lowering inflation, the International Monetary Fund has said that it expects a significant improvement in the country’s economic outlook and estimated GDP growth in 2014-15 at 7.2 per cent and 7.5 per cent in 2015-16. In its assessment report for the country, IMF has also called for continuing fiscal consolidation and higher spending by cutting subsidies.
According to the IMF India Consultation Report:
1. Near-term growth outlook has improved and the balance of risks is more favourable through increased political certainty, policy actions, improved business confidence, lower commodity import prices, and reduced external vulnerabilities.
2. High inflation expectations and wide fiscal deficits remain key macroeconomic challenges. Supply-side bottlenecks and structural challenges constrain medium-term growth and hinder job creation.
3. Underlying inflationary pressures and upside risks remain. Monetary policy should remain tight to reduce inflation and inflation expectations durably
4. Fiscal consolidation should continue and quality of consolidation should be improved through tax reforms such as Goods and Services Tax (GST) and measures to further reduce subsidies.
