Budget 2022-23 thoughtful policy agenda for India, says IMF Managing Director

The Union budget presented by Finance Minister Nirmala Sitharaman recently is a very thoughtful policy agenda for India, International Monetary Fund, Managing Director, Kristalina Georgieva said.

We have been projecting a quite robust growth for India. Yes, there is a small downgrade versus our previous projection from 9.5 per cent to 9 per cent for 2022. But then we also have a small upgrade for 2023, because we think that we will see a stable growth not very different from (those projected by) the (Union) Minister of Finance, Georgieva said during a virtual round table with a group of reporters.

The International Monetary Fund (IMF), she noted, sees this being conditioned on a number of factors, including that in the Covid pandemic they continue to function better and should the pandemic continue to be around, and that the tightening of financial conditions would be done with clear forward guidance and in a prudent manner, not creating any more significant shock.

So far, by the way, what we see is that the tightening of financial conditions is not translating into a big problem for emerging markets. In comparison to previous periods, the impact on rates is not at all significant. Why? Because emerging markets have worked to build buffers and strength for situations like this and because many of them themselves have taken prudent actions once they faced inflationary pressures, she said.

We are very positive on the fact that India is thinking of addressing short-term issues, but also long-term structural transformation, and that there is a great deal of emphasis placed on innovation on research and development on human capital investment and digitalisation, as well as thinking of how India can accelerate the climate change agenda using economic instruments for that, Georgieva said.

So, all in all, I read the (budget) statement and I thought it was a very thoughtful policy agenda for India, the senior official said in response to a question.