Global investors feel that the Indian “elephant is ready to run” after sustained economic reforms, a top IMF official has said, but underlined the need for implementing these reforms and having a sound banking sector balance sheet for a steady growth path.
Changyong Rhee, Director of the Asia and Pacific Department at the International Monetary Fund (IMF), also praised the Modi Government for doing well in the area of reforms.
Changyong — who oversees the IMF’s work in the region including its lending operations and bilateral and multilateral surveillance of economies ranging from China, Japan, and India to the Pacific Islands — said that investors are telling him that after four years of impressive economic reforms, “the elephant is now ready to run”.
“I think, I would rather emphasise implementation. If India can lead global growth like China in the last decade; you have the potential, you have the population, you have the market size...Everything. Implementation is actually the key,” he said.
Referring to the 7.4 per cent growth rate, he said, at this moment it was one of the highest growth rates among large emerging economies.
“Now India’s growth rate is higher than China’s growth rate. Many countries are looking at India, whether India can be another growth leader as China in recent decades,” he noted.
“India already has many good plans....There are many, but not as much progress. That was the complaint from the investors from abroad,” he said.
He said now the Indian Government was working on structural reform and the coming elections will be very important.
“What we are saying is that the coming election will be very important, but we believe and we hope that the Modi Government would not slow down the reform effort and implementation (of reforms). Because that will determine India’s future,” he said.
“So, we really hope that this election would not derail the Modi government’s efforts to reform,” the senior IMF official said.
“And, once the elephant starts running, it would have a positive impact on the global economy,” he said.
He said when advanced economies were slowing down due to the global financial crisis, it was China’s high growth which maintained global growth.
“So now that China’s growth rate has come down,..The emergence of India economy is very good news because it can be another pole, which can maintain global and regional growth, he said.