WASHINGTON: India should expedite the structural reform process by working to build consensus, according to senior IMF officials who said the country needs land and labor market reforms to achieve sustained growth.
Changyong Rhee, Director of the Asia and Pacific Department at the International Monetary Fund, said India has some world class economists and there is no dearth of good policies; the issue is with their implementation.
“I don’t know whether my Indian colleagues will like it or not. Just do it. Stop talking,” Rhee told PTI in an interview when asked what India needs to do to achieve high sustained growth.
Rhee quickly explained stating that “just do it” might be too simple a line.
“India is, of course, a democratic society, so consensus needs to be first built. It is in that context, though, that India needs to expedite the reform process first, by working to build consensus and agreement and then followed by implementation,” he explained.
“I think, the real issue is whether India is ready to implement; even though gradually, even though one by one. That is why I liked the Modi Government because it is starting to implement it.”
Rhee said that “reaching consensus” is much harder in India than in China, but it should not be an excuse for “not doing the reforms”.
Overall, the IMF sees positive sign of the structural reforms and believes that it will be an important for India top continue with them.
“If you look at the other reforms that India has to do, there is a more daunting task,” he said.
Ranil Salgado, another IMF official said that the Modi government has done a number of structural reforms. “We have the inflation targeting framework. We have the insolvency and bankruptcy code and also importantly the national Goods and Services Tax. Those are some of the key reforms and then they’ve done a bunch of smaller reforms including improving the business climate, liberalizing FDI investment regime,” Salgado, the IMF’s mission chief for India, said.
“Then finally they had been focused on macroeconomic stability. Overall, we rethink that this has improved the underlying fundamentals of the economy,” Salgado said.
He said that India had also been able to build some of the buffers like foreign reserves have gone up substantially for most of the time, except in the last six months or so. But some of the key structural challenge remain, he said, adding that “product market type reforms” are needed as well as for land and labor market reforms. PTI
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