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Informist, Thursday, Apr. 24, 2025

NEW DELHI - The International Monetary Fund is worried about the private investment in India which continues to be lackadaisical, said Krishna Srinivasan, director for the IMF Asia and Pacific department, on Thursday.

"If India has to reach its target of being an advanced country by 2047, then private investment really needs to pick up momentum and that is where a lot of reforms are needed," Srinivasan said at a press conference. "As a share of GDP, it is not too bad, but if you look at investment in machine and equipment, things which can increase the productivity of the economy, that is pretty muted," the IMF official said.

Private investment has been largely missing in recent years in India. According to government data, gross capital formation by the private sector--a proxy for investments--fell to a three-year low of 11.2% in 2023-24 (Apr-Mar). Even the share of private sector investment in gross capital formation fell to 36.9% in FY24 from 39.5% in FY23.

The IMF earlier this week lowered India's GDP growth forecast for FY26 by 30 basis points to 6.2% and for the next year by 20 bps to 6.3%, citing higher levels of trade tensions and global uncertainty. India's growth outlook is relatively more stable compared with other countries, supported by "private consumption, particularly in rural areas", the IMF Tuesday said in the April edition of its World Economic Outlook.

Thomas Helbling, deputy director for the IMF Asia and Pacific department, Thursday said that the Indian economy could benefit in the medium term if it opens up to trade and structural reforms including labour market reforms. "In the long-term, India could work on education and also continue with push on public infrastructure which would allow India to benefit from greater integration regionally and globally," Helbling said.  End

Reported by Shubham Rana

Edited by Akul Nishant Akhoury

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