New Delhi: International Monetary Fund (IMF) chief Kristalina Georgieva praised India’s ‘bold economic and structural reforms’ – from revised direct and indirect tax laws to the mass rollout of a digital payments ecosystem and the conceptualisation and integration of a digital social identity (i.e., the Aadhaar). She was speaking on the first day of the IMF’s semi-annual gathering of finance ministers and central bank governors
“I’m very big on India because of the boldness of their reforms. For example, everyone told India that digital identity on a mass scale could not be done… but India proved them wrong,” Georgieva said.
Recalibration of Goods and Services Tax brackets in September was among the big ticket reforms she referred to. This was when the 12 and 28 per cent slabs were dropped and a 40% ‘sin tax’ introduced.
This change, the government had said, would boost domestic consumption by making a myriad items, including daily essentials like ghee, milk, paneer, butter, coffee, and roti, much cheaper. Income tax slabs were also reworked and tax laws re-written.
Last week, she had called the economy a ‘key growth engine’ within the context of a global economy still recovering from the pandemic.
The global growth forecast is roughly three per cent over the medium term – down from 3.7 per cent pre-pandemic, she had said.
“… global growth patterns have been changing… with China decelerating steadily while India develops into a key growth engine,” the IMF boss had said.
As of July data, the IMF predicts 6.5 per cent growth for India in 2025 and ’26. The Reserve Bank of India, however, was more optimistic. In October RBI Governor Sanjay Malhotra said the federal bank had raised its projection to 6.8 per cent based on implementation of growth-inducing structural reforms, including streamlining GST brackets.
Georgieva didn’t seem too pleased with the G20 though and said she would continue to push it to focus on persistent debt issues burdening developing economies.
“Growth is slow, debt is high and the risks of financial downturn are … there,” she said, adding the IMF continues to work with the World Bank to look at countries with liquidity issues.
Last week she had said global public debt is expected to cross 100 per cent of GDP by 2029. The concern for the here-and-now, meanwhile, is that already some 150 developing countries are either unable to make debt repayments or are rapidly nearing that threshold.
She also said the IMF continues to work with the World Bank to help countries with severe liquidity problems, in addition to trying to keep debt issues on the radar at the G20.
These comments are critical for the immediate future. The current chair of the G20 is South Africa, which has made debt sustainability a key issue. The next chair, however, is the United States, and President Donald Trump has made not signalled any great interest in this topic.
Georgieva also underscored potential uncertainties – arising from the impact of the US outrageous trade tariffs – in the global economy for 2025 that she had flagged back in January.
