International Monetary Fund (IMF) on Friday blamed concerns over governance for affecting the business sentiments in India and called for renewed efforts to revive flagging structural reform agenda in the country.
“In India, renewed efforts are needed to revive the flagging structural reform agenda. These include measures to improve the investment climate, remove infrastructure bottlenecks, and further expand education opportunities. It is also important for India to make progress in reducing barriers to trade, in order to maximise the potential of its continuing demographic dividend,” said IMF’s report on Asia-Pacific Regional Economic Outlook.
It also blamed domestic factors for India’s growth slowdown over the second half of 2011. “Concerns about governance and slow project approvals by the government have weakened business sentiment, which in turn has adversely affected investment, along with cyclical factors such as global uncertainty and policy tightening, although the latter has loosened since then,” said the report.
IMF has lowered India’s growth forecast to 6.9 per cent for 2012 from seven per cent projected in January. “In India, the lowered growth outlook in 2012 owes much to a slowdown of investment which partly reflects structural factors,” it said.
Recently a lot of analysts have been pointing out that a policy-paralysis like situation has swept into the country as the government has not been able to push major reforms.
Recently, a lot of analysts have been pointing out that a policy-paralysis like situation has swept into the country as the government has not been able to push major reforms. A lot of controversy was generated when last week finance ministry’s chief economic advisor Kaushik Basu told a Washington-based think tank that major reforms in India are unlikely to happen before the next parliamentary elections slated for 2014.
Disagreeing with this perception, Prime Mini-ster’s Economic Advisory Council chairman C. Rang-arajan on Friday said, “Reforms will continue. Reforms are a continuos process. The reform agenda will continue to be implemented.”