India a “bright spot” in cloudy global economy: IMF Chief

New Delhi: India’s economy is a bright spot in a cloudy global economy, with recent policy reforms and improved business confidence set to boost growth, the chief of the International Monetary Fund said on Monday.

IMF Managing Director Christine Lagarde
IMF Managing Director Christine Lagarde
Speaking in New Delhi, IMF Managing Director Christine Lagarde welcomed the government’s latest budget as “a step in the right direction”, and singled out higher infrastructure spending for praise.

The IMF, in its latest forecast last week, said it expected Asia’s third-largest economy to grow by 7.5 percent in the 2015/16 fiscal year starting on April 1, below the government’s own forecast.

A pact between the government and the Reserve Bank of India to formalise inflation targeting “should provide a robust institutional foundation for maintaining price stability”, Lagarde said in a speech to women students.

But to anchor long-term growth and employ a workforce that will grow to become the world’s largest by 2030, India needs to open up its labour market to women, boost financial inclusion and invest even more in infrastructure, she said.

Lagarde cited a new IMF working paper which found that only 33 percent of women in India worked – below the global average of 50 percent and the average in East Asia of 63 percent.

Not only is female participation in the labour force low, but it has been declining since 2005. Lagarde called this a “huge missed opportunity” and called for urgent remedies.