IMF Recognizes Indian Growth
Christine Lagarde has kind words for subcontinent on New Delhi trip
Ms. Lagarde praised stability of economic growth and Indian ID system that supports social welfare programs.
The largest democracy in the world, India has emerged as a developmental powerhouse since liberalizing its market in the early 1990’s. Its growth rate surged from an average of about 1 percent annually to an enviable 7.5 percent in the late 2000’s, as it abandoned socialist and autarkist economic models in favor of more free market ones. This leap forward has raised millions of Indians out of poverty, and built the fourth largest economy in the world on the subcontinent.
International Monetary Fund (IMF) Managing Director Christine Lagarde was in New Delhi this week, where she lauded the merits of Indian governance, and the efforts underway to ensure that economic development reached even the nation’s poorest. She reserved special praise for the new identification system put in place by India, which relies on biometrics to identify individuals, to bring order to what is often a chaotic world when it comes to social welfare programs.
“I was extremely impressed by the unique identification system that is being gradually being put in place in this country to identify within the population of India those that really need most the subsidies and do so within a system that has its integrity,” she said.
Another topic raised was the ever sensitive issue of IMF institutional reform. Like the World Bank and UN Security Council, the IMF shows its age, and many have called for greater representation in the organization by powerful developing countries – like India.
“China and India have ratified the quota increase and I know they will be keen to rally support around the organization to make sure that we have the relevant, requisite number of votes to make sure that the quota reform is implementable. I will be a strong advocate of that.”
The only point of caution that Ms. Lagarde raised came from geopolitics that lay largely outside of Indian control. She warned that a reduction in Iranian oil supply, from tighter sanctions, a blockade of the Strait of Hormuz, or conflict, could have serious deleterious effects on the Indian economy.
Home to more than a seventh of the world’s population, India has proven itself an important player in global politics, and a competent, if sometimes slow agent of economic development. As Ms. Lagarde pointed out, the country has a lot to be optimistic about, but must also remain vigilant and cautious as it moves forward.