DNA Money Edit: Why structural reforms vital for GDP growth?

The International Monetary Fund (IMF) may have moderately scaled down India's economic growth projection to 7.3% for 2019-20, but has predicted that the country would retain the tag of the fastest-growing large economy as China's growth is pegged way below that of India. According to Gita Gopinath, chief economist at IMF, the global growth is expected to stabilise beyond 2020, at around 3.5%, bolstered by growth in China and India.

Its message for India is very clear: that the country should continue to undertake economic reforms, including hire and fire, in order to create jobs. In its World Economic Output (WEO) titled 'Growth Slowdown, Precarious Recovery', a flagship publication brought out during the annual spring meetings of the IMF and World Bank in Washington, the IMF pegged India's economic growth for 2018-19 at 7.1%, a shade higher than the official projection of 7% by the second advance estimates. Meanwhile, it revised down its prediction to 7.5% from 7.7% for the next financial year.

IMF believes that India's growth is projected to pick up, supported by the continued recovery of investment and robust consumption amid a more expansionary stance of monetary policy and some expected impetus from fiscal policy. The continued implementation of structural and financial sector reforms with efforts to reduce public debt will remain essential to secure the economy's growth prospects.