The International Monetary Fund has revised India’s growth estimate to 6% from 5.4% and its Managing Director has said good policies are helping the country outperform. She has also called India a bright spot in what has been a “rather cloudy horizon over the last years”.
In an exclusive interview with NDTV, IMF Managing Director Kristalina Georgieva was told that, in the last fiscal, the organisation had pegged India’s growth at 5.4% and the actual figure achieved was about 7%. Asked whether she had any concerns that their projections were somewhat lower, the IMF chief said, “In 2022, indeed India was above 7% and that is great for India, great for Asia and great for the world. For this year, we are projecting a bit of a slowdown to around 6% and it is not because of India, but because of global growth slowing down.”
“What we are seeing in a very positive light is how good policies are helping India to outperform. Three factors have led to a strong performance from India, making it a bright spot in what has been a rather cloudy horizon over the last years,” she added.
Listing out the three key factors, Ms Georgieva pointed to digitalisation, India’s attractiveness as an exporter of services, and very prudent fiscal policy – collecting taxes and prudently using money.
She said India now has digital public infrastructure that serves people and businesses, becoming a great source of growth. On India’s attractiveness as an exporter of services, she said that it is “booming, faster than we anticipated”.
The interview was held on the sidelines of the G20 Finance Ministers and Central Bank Governors meeting in Gandhinagar.
Asked whether she believed the demographic dividend of India, which is now the world’s most populous country, will translate into growth, Ms Georgieva said, “Oh certainly. And it is already translating into growth. One of the competitive strengths of India in the export of services is because of IT prominence and the fact that you generate this inflow of very skilled people. I very strongly believe that India has chosen to invest in things that determine great use of the dividend you are talking about.”
On India’s research and innovation the IMF chief said, “In a very real way, India today is reaching for the Moon. I hope soon there will be reports of success in the area. Another aspect is entrepreneurship. Digital public infrastructure, among many other qualities, has allowed young people to take risk, to access money, to capture opportunities. And that entrepreneurial culture, frankly, I see this as very similar to the rocket that went to the Moon. It is driving Indian growth.”
Asked about the war in Ukraine and whether the differences among nations in the G20 leading to a lack of joint statements in the last few sessions is problematic, she said it is not good that we can agree on the issues but not on the text.
Pointing to coordination of policies and India’s focus on climate change and digital money, she said, “Nonetheless, India has done an impeccable job in leading, especially in this very complicated time because it focused on what really matters to the billions of people around the world.”
The IMF chief called Russia pulling out of the deal allowing Ukraine to export grain through the Black Sea irresponsible and said the move will impact countries that have nothing to do with the conflict. She said that people will go hungry if food prices go up, and that she hoped there is progress on this front.
On Pakistan’s economic situation, Ms Georgieva said, “Right now, we are concentrating on reducing the bleeding of reserves, improving the collection of taxes and public spending. But there has to be a much deeper structural reform package.”
Ms Georgieva said the IMF is also thinking about artificial intelligence’s impact on economies and jobs. She said they are looking into how it can help with productivity but also what the implications are for jobs and the skilling of people. She also said that the organisation is looking at the risks that AI may bring, and will take a holistic view.