The International Monetary Fund (IMF) today made out a case for Asian countries like India to adopt a supportive monetary policy and growth-friendly fiscal measures to combat the impact of global economic woes.
Observing that India’s star is shining bright, IMF Managing Director Christine Lagarde suggested that India should encourage private investment, make product markets more efficient and work to improve infrastructure.
She was speaking at a conference on ‘Asia’s Advancing Role in the Global Economy’, which among others was attended by Prime Minister Narendra Modi and Finance Minister Arun Jaitley.
Asia’s response to the global challenges, he said, should be in the form of “supportive monetary policy — consistent with price and external stability objectives, growth-friendly fiscal measures and macro-prudential measures to safeguard financial stability”.
The Reserve Bank is scheduled to meet for its policy review on April 5 amid growing clamour for a rate cut.
The policy specifics, Lagarde said, would “vary across countries and according to circumstances. In all cases, however, it is safe to say structural reforms are key to boost competitiveness, growth, and jobs”.
As for India, she put the focus on “enhancing the efficiency of product markets, encouraging private investment, and improving infrastructure”.
Focus of structural issues “will not only support Asia’s near- and medium-term prospects, but secure the foundations on which to unlock the region’s exciting future potential”.
India, she stressed, “stands at a crucial moment in its history — with an unprecedented opportunity for transformation. Important reforms are already under way.
Think, for example, of Make-in-India and Digital India. And with the promise of even more reforms to come, India’s star shines bright.” Among other things, the IMF chief also underlined the need for greater trade integration to support more sustained growth, especially for India and other countries in South Asia.
“Multilateral trade liberalisation has the potential to be globally welfare-enhancing. If, however, progress at that level remains slow, comprehensive regional trade agreements can help lower tariff and non-tariff barriers, and incorporate new areas like services,” Lagarde noted.
She made a reference to the global economy facing a host of challenges like volatile markets and capital flows, a sharp drop in commodity prices and escalating geopolitical tensions.