IMF urges India to speed up reforms
India could achieve sustained economic growth rates of up to 10 per cent - at which it would keep step with China - if the government quickened the pace of reform, the International Monetary Fund said last night.
ADVERTISEMENT
The endorsement of Prime Minister Manmohan Singh's vision of double-digit growth will be a fillip for reformers in the run up to the Indian budget on February 28, traditionally India's most important policy-making event of the year.
The IMF's annual review called on P. Chidambaram, India's finance minister, to produce a strong budget that "overperformed" on the fiscal front and countered perceptions of a weakening of the government's commitment to reform.
Next Tuesday's budget is seen as a test for economic reformers, forced on to the back foot by Communist allies who are opposed to privatisation, labour reform and liberalisation of foreign investment rules.
The Fund's review, which described India as "reaping the rewards of more than 15 years of reforms", will be interpreted as a coded warning that the greatest danger to the country's economic resurgence is complacency and policy-making paralysis.
"The current favourable economic conditions provide a good opportunity to speed structural reforms," it said. "In particular, measures to improve the business climate and reform labour laws would have a big pay-off [in] investment and job creation." It said that with an acceleration of the reform process, India "would be able to achieve sustained economic growth of 8-10 per cent" - more than twice the so-called "Hindu rate of economic growth" that prevailed prior to the start of significant market reforms in 1991.
The IMF's prediction of a rate of growth exceeding 7.5 per cent this year is in line with Reserve Bank of India forecasts. It expects growth in 2006-07 to decline slightly as the economy continues to adjust to higher oil prices and interest rates.
Warning of "upside risks" to inflation from strong domestic demand, evident in the widening current acc-ount deficit and rapid credit growth, it projected a rise in inflation to 5.5 per cent in 2006-07 from an average of 4.75 per cent in 2005-06.
Mr Chidambaram last year announced a "pause" in the programme of deficit reduction, after three years of declining fiscal shortfalls, to allow for greater spending on social programmes targeting rural poverty and infrastructure bottlenecks.
The IMF said the general government deficit would rise for the first time in four years to 7.75 per cent of gross domestic product in 2005-06, with the central government deficit target of 4.3 per cent of GDP - breaching minimum demands of India's fiscal responsibility act.
JP Morgan's Rajeev Malik wrote in a note that he expected a "pedestrian" budget, warning the favourable economic backdrop, with expected growth this year of 8.1 per cent, was easing the pressure on the government to bring in difficult reforms.
IMF：印度经济增长可达10%
p>国际货币基金组织(IMF)昨晚表示，如果印度政府加快改革步伐，该国经济可能实现速度高达10%的持续增长，这一速度可使其跟上中国的发展。
印度总理曼莫汉?辛格(Manmohan Singh)认可经济实现两位数增长的预期，这对改革派是一种激励；印度将在2月28日前编制预算，这一向是印度一年中最为重要的（经济）决策。
IMF在年度评估中，呼吁印度财政部长齐丹巴南(P. Chidambaram)编制更积极的、财政方面“表现更好”的预算，并改变人们对政府削弱改革承诺的看法。
下周二的预算被视为对经济改革派的一次考验。共产党盟友正在对经济改革派施加压力，他们反对私有化、劳动力改革和放开对外国投资的限制。
在IMF年度评估中，形容印度“正在收获逾15年改革的成果”；该报告将被解读为一种含蓄的警告：即印度经济复苏所面临的最大危险，是自满和决策瘫痪。
“目前有利的经济环境，为加快结构性改革提供了良好机遇，”IMF称。“特别是，改善商业环境和改革劳动法方面的措施，将在投资和创造就业机会方面得到巨大回报。”
IMF预计印度今年经济增长率将超过7.5%，与印度储备银行(Reserve Bank of India)的预期相符。它同时预计，由于经济将继续对油价和利率的上升作出调整，2006至2007年的经济增长速度会略有下降。
该组织对印度国内需求强劲所带来的通货膨胀“上扬风险”发出警告。该国经常账户赤字不断扩大，信贷规模增长迅速，都是国内需求强劲的明证。该组织预计，2006至2007年该国通货膨胀率会升至5.5%，而2005至2006年的平均水平为4.75%。
