Krishna Srinivasan, the Director of the IMF’s Asia and Pacific (APAC) Department, believes that India’s emergence as the fastest-growing economy is not surprising. He explained that China, despite its massive size, would always have slower growth than India due to its ageing population and shrinking labor force. Srinivasan praised India’s economic performance, particularly its projected growth rate of 6.8% for the fiscal year 2024-25, calling it “very impressive.”
In a discussion with ANI on April 20, Srinivasan highlighted India’s ability to navigate multiple shocks, such as the COVID-19 pandemic, the Russia-Ukraine war, and recent tensions in the Gulf region. He attributed India’s impressive growth to strong private consumption and public investment and emphasized that there are no major red flags in the near term. However, he also stressed the need for significant reforms in education and healthcare to fully utilize India’s expanding labor force.
Srinivasan noted that India has a young population expected to add about 15 million people to the labor force each year. To leverage this demographic advantage effectively, he stressed the importance of substantial investments in education and healthcare so that the growing labor force can contribute to the economy effectively. While expressing optimism about India’s medium-term prospects with a growth rate of around 6.5%, Srinivasan underlined that implementing comprehensive reforms will be crucial to achieve sustainable growth in the coming years.
Overall, Srinivasan’s insights shed light on India’s economic outlook and highlight opportunities for strategic reforms and investments in key sectors like education and healthcare that could help maintain its rapid growth trajectory over time.