IMF Backs India's Fiscal Path, Sees Strong Growth at 7.3%

"We're encouraging them to continue to focus on a medium-term fiscal consolidation path," IMF Communications Director Julie Kozack told reporters at a news conference here.

This would "enable India to rebuild fiscal buffers and ensure that resources which right now are kind of a bit tied up on debt servicing that they can then re be reallocated for other priority spending over time in India," she said in response to a question.

The Fund welcomed the Union Budget's direction, particularly its attempt to balance consolidation with public investment. "We welcome the budget's continued focus on gradual fiscal consolidation while maintaining critical capital expenditure in India. Both the central government and states," Kozack said.

Her remarks reflect the IMF's view that sustained fiscal discipline, alongside capital expenditure, is essential to preserve macroeconomic stability and support long-term growth.

Kozack also highlighted India's strong economic performance, describing it as "a key engine for global growth."

She said: "The economy has performed well. We've upgraded our growth projection in the January World Economic Outlook. Real GDP growth for fiscal year 25--26 is projected at 7.3%. And that's significantly higher than what we had projected earlier, earlier on. So it was a significant upgrade for India."

The upward revision in the IMF's latest World Economic Outlook underscores India's position among the fastest-growing major economies, even as global growth remains uneven.

Beyond fiscal and growth indicators, Kozack referred to India's role in emerging technologies. "Of course, our managing director is delighted to be participating in the AI summit. She delivered remarks at the summit earlier today," she said.

She added that the IMF chief was "very much looking forward to the AI summit to engage with entrepreneurs, the tech industry, and the Indian authorities to really hear from them on India's great progress and promise in the field of AI."

India has consistently remained one of the world's fastest-growing large economies, even amid tighter global financial conditions and geopolitical uncertainty. The IMF has repeatedly emphasised the importance of fiscal prudence, structural reforms, and sustained investment in infrastructure and technology to maintain resilience.

The Fund's latest assessment reinforces a calibrated message: preserve growth momentum while steadily reducing fiscal vulnerabilities to create room for future priority spending.

- IANS