"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