"INDIA NEEDS REFORMS TO BENEFIT FROM CHINA+1"

Krishna Srinivasan, Director of the Asia and Pacific Department at the International Monetary Fund, on how India can benefit from the current trade barriers

- KARISHMA ASOODANI

THE INTERNATIONAL MONETARY FUND (IMF) recently lowered India's growth forecast for FY26 from 6.5% to 6.2%, citing global uncertainty and structural bottlenecks.

To unpack the outlook and understand what India must do to make good of the China+1 opportunity, Business Today spoke with Krishna Srinivasan, Director of the Asia and Pacific Department at the IMF. Edited excerpts:

India's growth forecast has been revised. If domestic consumption strengthens, could we see an upward revision?

We have revised our forecast for India from 6.5 to 6.2% for this year, and 6.3 next year. These revisions in the bigger scheme of things are small compared to other countries. And partly related to the trade tensions and uncertainties.

So, if there is a big improvement in domestic demand, for example, if investment picks up in India, there would be an upside risk for India’s growth forecast. But now, we have lowered it.

You also mentioned recently at the spring meetings that private investment remains a concern. What are the key bottlenecks?

Private investment itself as a share of GDP is compared reasonably favourably with the other emerging markets, but where it’s falling short is investment in things like equipment and machinery, important for productivity. That’s not picking up in India.