Creating jobs, removing trade restrictions, infrastructure should be reform priorities for India, says senior IMF official

Creating jobs, removing trade restrictions, infrastructure should be reform priorities for India, says senior IMF official


India remains the world’s largest growing economy, a senior official said International Monetary Fund He said, noting that the country’s macroeconomic fundamentals are good.

“India is considered the world’s largest growing economy. We estimate growth at seven per cent in FY 2024-25, supported by a recovery in rural consumption as harvests have been favourable. Inflation is expected to decline to 4.4%. are supposed to.” FY24-25, despite some volatility as food prices normalize,” Krishna SrinivasanThe director of the IMF Asia Pacific Department said in an interview on Tuesday (October 22, 2024).

In terms of other fundamentals, he said, “Despite the elections, fiscal consolidation is on track. The reserve position is quite good. Generally macro fundamentals are good for India.”

He suggested that the country’s reform priorities after the elections should be in three areas.

“First, there is the issue of creating jobs etc. in India. In that context, I think the implementation of labor codes, which were approved in 2019-2020, are important because they help in making labor markets socially flexible. Will allow.” Safety to workers,” he said.

“The second thing is that if you want to be competitive, you also have to remove some of the trade restrictions that you have right now. Because what’s happening in India is, you know, when you liberalize trade, you get productive “There’s more competition out there and that in itself can create jobs, I think it’s important that more trade restrictions are lifted,” he said, allowing companies to survive.

“And finally, I would say continue the reforms, you know, strengthening the infrastructure, whether it’s physical infrastructure or digital infrastructure, and that’s an important achievement, and it’s continuing with that. But this Going forward, I would say you have to focus on agriculture and land reforms, you have to think in terms of strengthening education and skills.”

Emphasizing the need to invest in the skills of the workforce, Mr. Srinivasan said, “In an economy that can create a lot of jobs in the service sector, it is important to have the right kind of skills. Therefore, investing in education, labor “Making the force efficient is very important”.

“Strengthening the social safety net is another reform. Finally, I would say that you still have a lot of red tape and so on when talking to people. Improvements in the business environment will be important aspects. These are some of the reforms that I think are priorities. Will give,” Srinivasan said in response to a question.

Sharing some examples of red tape in India, he said, some investors feel that entering the Indian market, somehow setting up an investment, getting land for a big investment can be a problem. Some also said that if you want to shut down and get out, that can also be a problem.

“These are just two examples. But I would say that the labor markets, you know, the labor codes are still a deterrent. These are reforms that you need to address moving forward,” he said.

Noting that the unemployment rate has declined to 4.9%, he said labor force participation and the employment-to-population ratio are increasing.

“For example, the percentage for labor market participation, at 56.4%, and employment-to-population (which is) about 53.7%, they have increased since the 40s. They were there even earlier, he said, Most of the improvement has been concentrated among self-employed workers, adding.

Mr Srinivasan also flagged the recent move of workers “towards a low-productivity agricultural sector” in the county, saying this trend has emerged because “the kind of jobs that are being created are not the best jobs”.

He also expressed concern over the low participation of women in the country’s labor force as well as rampant unemployment among the youth.

“There are different numbers, but we would all agree that women’s labor force participation is at a low level, and youth unemployment is quite high. So in view of this, there has to be an emphasis on improving the environment to create employment. ” He said.



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