Lanterna Rally

Author: Oecd

Publisher: OCDE

Published: 2014-11-19

Total Pages: 153

ISBN-13: 9789264207073

Improving the macroeconomic framework to support sustainable and inclusive growth. India enjoyed nearly a decade of strong economic growth sparked in part by structural reforms, during which poverty was cut in half. However, growth faltered between 2012 and 2014 as gains from past reforms diminished, and fiscal and monetary stimuli could no longer be sustained due to high inflation and current account deficit. External factors also played a role. As fiscal and monetary policies have been gradually tightened, the fiscal deficit and inflation have started to decline while the current account deficit has narrowed. Activity has rebounded in 2014 and is projected to accelerate but the implementation of reforms is critical. The government efforts to simplify regulations and administrative procedures should enhance rule of law. Still-high inflation, the fiscal deficit, rising nonperforming loans, and structural bottlenecks are also key downside risks. Large energy and fertiliser subsidies and delays in passing key tax reforms constrain the public investment in physical and social infrastructure, including education and health, needed for long-term growth and lower inequalities