WASHINGTON, Nov 12: India needed higher productivity growth, stronger private investment and faster creation of high-quality jobs to achieve its medium-term potential growth rate of 6.8 per cent, the International Monetary Fund said on Thursday.

The Fund said favourable demographics, a large and growing domestic market, and continued structural reforms had supported its assessment. It said India needed to continue reforms to sustain its medium-term growth prospects.

At a glance

  • The IMF estimated India’s medium-term potential growth at 6.8 per cent.
  • The estimate was raised from 6.5 per cent in the October World Economic Outlook.
  • The Fund projected 7 per cent growth for India in FY 2027 and FY 2028.
  • Productivity, investment and employment will be discussed during Article 4 consultations with India.

What happened

IMF Communications Department Director Julie Kozack outlined the Fund’s assessment while responding to questions from reporters in Washington.

She said the revised medium-term estimate reflected India’s favourable demographics, a large and expanding domestic economy and market for goods, and continued momentum in structural reforms.

Kozack said India should build on these factors through continued reforms, with particular attention to raising productivity across the economy. The Fund said stronger productivity growth was necessary to advance India’s medium-term potential.

It also said India needed stronger private investment and faster creation of high-quality jobs. These measures, Kozack said, would help the country achieve the projected pace of medium-term growth.

The IMF’s assessment dealt with India’s potential growth rate, which measures the pace at which the economy can expand over the medium term without creating unsustainable pressures.

Who said what

Kozack said the IMF had encouraged India, as it had other countries, to continue reforms aimed at increasing productivity.

She said higher productivity growth, stronger private investment and a faster pace of high-quality job creation were needed to take India’s medium-term growth prospects forward.

“But in general, like in many countries, we are encouraging India to take continuing reforms, particularly to focus on how productivity growth can be increased,” Kozack said.

She said the Fund would examine productivity, investment and employment issues during its Article 4 consultations with India. Article 4 consultations are the IMF’s regular discussions with member countries on economic and financial policies.

Background

In its October World Economic Outlook, the IMF raised India’s medium-term potential growth estimate by 0.3 percentage points to 6.8 per cent from 6.5 per cent.

Last month, the Fund also raised its growth forecast for India to 7 per cent for FY 2027, from 6.4 per cent projected in July. It raised the forecast for FY 2028 to 7 per cent from its July estimate of 6.7 per cent.

The higher medium-term estimate took account of demographic conditions, domestic demand and the progress of structural reforms, the Fund said.

Why it matters for Assam and the Northeast

The IMF described India as a key engine of global growth and said the economy had strong fundamentals and shown considerable resilience. Its assessment highlighted the importance it attached to reforms that raise productivity, attract private investment and create better-quality employment across the country.

“India does remain a key growth engine for the world. The economy has strong fundamentals and has shown considerable resilience,” Kozack said.

What next

The IMF will take up the identified issues during its Article 4 consultations with India. Kozack did not specify a date for the consultations or detail the reform measures the Fund would examine.