"An unprecedented opportunity for transformation" : IMF chief Christine Lagarde

Appreciating continuing reform process in the country, IMF chief Christine Lagarde on Saturday said “India’s star shines bright” amid global economic challenges and can deliver nearly two-thirds of the worldwide growth over the next four years despite a slowing momentum.

The world’s fastest-growing large economy, she said, is on the verge of having the largest and youngest-ever workforce and, in a decade, set to become the world’s most populous country.

“So, India stands at a crucial moment in its history — with an unprecedented opportunity for transformation. Important reforms are already under way,” the IMF managing director said at a conference on ‘Advancing Asia: Investing for the Future’ here. “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.”

“Over the next four years, even with a slightly declining momentum, it stands to deliver nearly two-thirds of global growth,” she added.

Lagarde, who got re-elected for the second term as chief of the Washington-headquartered International Monetary Fund (IMF), pointed to the global economy facing many challenges. These challenges, she said, include volatile markets and capital flows, economic transitions and financial tightening in many countries, the large drop in commodity prices, including oil and escalated geo-political tension.

Asia needs to take a leadership role in the global economy that reflects the continent’s growing clout, International Monetary Fund managing director Christine Lagarde said.

Asian officials should keep monetary policy supportive, while using fiscal policy to boost growth and macro-prudential measures to protect financial stability.  Adopting structural reforms to boost competitiveness, growth and jobs will be key, she said.

Asia the “world’s most dynamic region,” noting it accounts for 40% of the world economy and will deliver nearly two-thirds of global growth over the next four years.

“Asia now affects the world more than ever before,” Lagarde said, according to the text of her remarks. “By the same token, Asia is now more deeply affected by global economic developments than ever before — and must respond to them.”

Asia’s rapid integration was one of the most striking global developments of the past generation. Many countries in the continent pulled off economic “miracles,” and several became world powerhouses, she said.

Lagarde urged the following measures in specific countries:

 China should improve the “allocation of credit to help rebalance the economy away from debt-led investment.”
 Japan should reform its labour markets and corporate governance, and deregulate its product markets.
 India, which is at a “crucial moment in its history,” needs to improve the efficiency of its product markets, encourage private investment and boost infrastructure.

Despite Asia’s growth, income inequality has increased in 15 of 22 Asian economies since 1990, Lagarde said. Broadening access to health and financial services is essential to unlocking the potential of the region’s 440 crore people, she said.

Policy makers should focus social spending on the neediest, and make taxes more progressive, the IMF chief said. Barriers facing women should be removed, access to infrastructure such as water and electricity should be improved, and Asian countries should pursue greater trade integration, she said, adding that Asia has a “massive stake” in combating climate change