Daijiworld Media Network - Washington

Washington, Feb 20: The International Monetary Fund (IMF) has endorsed India’s current budget direction while urging the government to remain committed to a medium-term fiscal consolidation strategy to rebuild fiscal buffers.

Addressing reporters, IMF Communications Director Julie Kozack encouraged India to continue prioritising gradual deficit reduction. She noted that such an approach would allow the country to ease the burden of debt servicing over time and redirect resources toward priority areas of spending.

The IMF welcomed the Union Budget’s dual focus on steady fiscal consolidation alongside sustained capital expenditure by both the central and state governments. According to Kozack, maintaining this balance is crucial for macroeconomic stability and long-term growth.

Highlighting India’s economic momentum, she described the country as “a key engine for global growth.” In the Fund’s January edition of the World Economic Outlook, India’s real GDP growth forecast for fiscal year 2025–26 was revised upward to 7.3 per cent — a notable upgrade from earlier projections.

The improved outlook reinforces India’s standing as one of the fastest-growing major economies at a time when global growth remains uneven. The IMF has consistently stressed that sustained fiscal discipline, structural reforms and continued investment in infrastructure and technology will be vital for preserving resilience amid tighter global financial conditions and geopolitical uncertainties.

Kozack also pointed to India’s growing influence in emerging technologies, noting that the IMF Managing Director was participating in an AI summit and engaging with entrepreneurs, industry leaders and policymakers to discuss India’s advancements in artificial intelligence.

The Fund’s latest assessment underscores a calibrated message for policymakers: safeguard growth momentum while steadily reducing fiscal vulnerabilities to create room for future development priorities.