India to be the biggest contributor to global growth for 30 years: IMF

Terming India as a ‘long-run source of global growth’, the International Monetary Fund (IMF) suggested that the Indian government should take appropriate steps and make structural reforms for speedy economic development. The IMF’s mission chief for India said that spillovers are not that big, as Indian economy is not ‘very open’.

Speaking with PTI, Ranil Saldago said, “For the (next) three decades, it (India) is a source of growth for the global economy and could be even longer. But three decades where India can be almost what China was for the world economy for a while.” He was comparing the Indian economy with the Chinese economy and has said that India has a long way ahead, but there is a need to focus on structural reforms.

However, the IMF chief felt positive with India’s 15 percent contribution in the global growth economy in terms of purchasing power parity measures. But he added that the trading is not high as China’s trade levels. He said, “India has three decades before it hits the point where the working age population starts to decline. So that’s a long time. This is India’s window of opportunity in Asia. It’s somewhat only a few other Asian countries have this.”

Though IMF’s Executive Board forecasts India’s growth ratios rise to 7.3 percent (FY-2018-19) and 7.5 percent (FY-2019-20), Saldago was of the opinion that for robust development, India will take some time. He stated the reason being that the Indian economy is still recovering from two shocks – demonetisation and implementation issues related to the GST – in 2016.

Saldago was also concerned about the implementation of GST on a national level. He stated that, “It’s something that’s difficult to do. Other countries have struggled. In India it’s much more complex because you have 29 states and union territories and you need agreement. I think that that was a great achievement,” he said.

The Indian IMF chief stated that Indian government’s steps to ‘streamline and simplify’ GST are a good stride. He said, “Overall we’re seeing efforts to improve the balance sheet of banks as well as corporate sector. In our view, these are all important things that need to continue.”