India making important progress on structural reform agenda: IMF deputy MD

(Representative image)

India is a "relative bright spot" in the world economy and is making "important progress" on structural reform agenda, International Monetary Fund's deputy managing director Antoinette Sayeh has said.

"Macroeconomic policies are responding to the significant headwinds, with fiscal policy measures supporting vulnerable groups and monetary policy addressing persistently high inflation," Sayeh said in New Delhi on January 6 at the launch of the IMF's book South Asia's Path to Resilient Growth.

The comments come days after the multilateral agency released the details of its Article IV consultations with India, in which it called on the government to be more ambitious with its fiscal consolidation.

"India is making important progress on its structural reform agenda, and further implementation of the reforms would help unlock its growth potential," she added.

Finance Minister Nirmala Sitharaman is set to present the Union Budget for 2023-24 on February 1, with economists predicting the fiscal deficit target for the next financial year may be set around 6 percent of the GDP, down 40 basis points from the current year's target. One basis point is one-hundredth of a percentage point.

Speaking on South Asia, Sayeh said that the reduction in extreme poverty in the region over the last two years was a remarkable success story but it should not be taken for granted and policy
choices had to be carefully made.

"...there are increasing signs of geo-economic fragmentation. We see the number of trade restrictions rising and the sectoral composition of trade restrictions has been shifting. Asia has gained a lot from openness and integration, and we hope for strong international cooperation to avoid fragmentation. That said, South Asia still needs to prepare for the worst," Sayeh said.