IMF Projects 6.5% GDP Growth for India, Reinforcing Economic Strength

The International Monetary Fund (IMF) has reaffirmed that India will continue to be the fastest-growing major economy, projecting a GDP growth rate of 6.5% for 2025-26. This growth is attributed to strong private investment and macroeconomic stability.

The IMF also emphasised the need for structural reforms to sustain long-term economic progress and achieve the goal of becoming an advanced economy by 2047.

Macroeconomic Stability and Growth Prospects

India’s economic growth remains strong, with the IMF forecasting a 6.5% real GDP expansion in both 2024-25 and 2025-26. This momentum is driven by robust private consumption, supported by sustained macroeconomic and financial stability. 

According to the Indian government’s second advance estimate, the country’s economy is expected to achieve the same 6.5% growth in 2024-25. The IMF noted that inflation is expected to stabilise within the Reserve Bank of India’s tolerance range as food price shocks subside.

Despite some moderation in growth, India’s economic performance has been resilient, with a year-on-year GDP increase of 6% in the first half of 2024-25. The financial sector has remained stable, with non-performing loans at multi-year lows. Fiscal consolidation has progressed, and the current account deficit remains well-contained, supported by strong service export growth.

Structural Reforms and Investment Climate

The IMF highlighted the importance of structural reforms to boost private investment and job creation. Comprehensive policy changes in labour markets, human capital development, and increased female workforce participation are essential for unlocking higher growth potential. 

Additionally, the IMF emphasised the need for governance reforms, improved ease of doing business, and trade integration through tariff and non-tariff reductions to attract foreign direct investment (FDI).

Encouraging private investment and FDI requires a stable policy framework, which is crucial for sustaining long-term economic expansion. While inflation has moderated within the central bank’s target range, food price fluctuations have introduced some volatility. However, India’s financial sector has demonstrated resilience, reinforcing economic stability.

Conclusion

India’s economic trajectory remains strong, with sustained GDP growth driven by private consumption and macroeconomic stability. The IMF underscores the significance of structural reforms in enhancing investment, employment, and long-term growth prospects. With a stable financial sector and controlled inflation, India is positioned to maintain its status as the fastest-growing major economy.

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