IMF says India is a ?Bright Spot? in World Economy

IMF says India is a ‘Bright Spot’ in World Economy

News: According to the International Monetary Fund (IMF), India will alone contribute 15% of the global growth in 2023 and continues to remain a relative 'bright spot' in the world economy.

Which factors will help India?
 India remains a bright spot at a time when the IMF is projecting 2023 to be difficult with global growth slowing down from 3.4% in 2022 to 2.9% in 2023.
 For FY 2023/24 (April 2023 to March 2024) India’s growth rate is projected at 6.1% a bit slow like the rest of the world economy, but way above the global average and subsequently, India is providing about 15% of global growth in 2023.
 According to the IMF, India has turned Digitalisation into a driver of overcoming the pandemic and creating job opportunities, while the country's fiscal policy has been responsive to economic conditions.
 The country's fiscal responsibility has been translated into a medium-term framework, with a strong anchor to public finances.
 Also, India is investing in the green economy, including renewables with potential to shift the country towards clean energy.
 The capital spending has increased, which would amount to 3.3% of gross domestic product, and will be the biggest such jump after an increase of more than 37% between 2020-21 and 2021-22.
 India’s relatively younger population. Close to 15 million people are added to the labour force every year.

What are concerns?
 Job Growth has not kept pace with Economic Growth of country.
 Emerging markets like India face the consequences of geo-political risks.
 As per the 'World Inequality Report 2022', top 10% of India's population hold 57% of the total national income while the bottom 50% share has gone down to 13%. India's inequality is driven by limited upward mobility due to unequal opportunity.
 India's export trend has declined, with India's trade deficit reaching a record 31 billion dollars in July 2022 due to recessionary trends in developed economies (like the US) and higher commodity prices.
 The capital outflows and the rising current account deficit is putting pressure on the Indian rupee.