## Seizing India’s Moment, by Christine Lagarde, IMF Managing Director

_IMF News, March 16, 2015_

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## Bibliographic details
- Authors: Christine Lagarde Managing Director
- Published: March 16, 2015

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### Introduction
- Speech delivered at Lady Shri Ram College, New Delhi, March 16, 2015.  
- Emphasis on India’s moment: demographic dividend, technological and cultural leadership, and potential to shape global growth.  
- Three-part outline presented:
  - Tour of the global economy and how to inject greater momentum.
  - Assessment of India’s economy and readiness to “fly higher.”
  - Discussion of quality of growth and benefits for the poor, women, and youth.

### State of the global economy—injecting greater momentum
- Current global recovery characterized as “too slow, too brittle, and too lopsided.”
- IMF global growth forecasts preserved:
  - 3.5 percent — expected global growth this year.
  - 3.7 percent — expected global growth next year.
- Major risks identified:
  - “Asynchronous monetary policy” in advanced economies, with potential for excessive financial market volatility, including in India.
  - Euro Area and Japan may remain in a prolonged “low growth-low inflation” state, raising recession and deflation risks.
  - Emerging markets could face a triple hit: a stronger U.S. dollar, higher global interest rates, and more volatile capital flows; note that many banks and companies increased dollar borrowing over the past five years.
  - Geopolitical tensions as compounding risks.
- Policy recommendations to restore momentum:
  - Coordinated policies: accommodative monetary policies where appropriate; growth- and job-friendly fiscal adjustment; structural reforms to lift employment and growth.
  - Use lower oil prices to cut energy subsidies and reallocate savings to targeted cash transfer systems—India example: some fuel subsidies replaced with cash transfers via the Aadhar system.

### India tomorrow—ready to fly?
- India characterized as a bright spot amid a cloudy global horizon due to recent policy reforms and improved business confidence.
- IMF growth projections for India:
  - 7.2 percent — growth expected this fiscal year.
  - 7.5 percent — growth expected next year.
- Structural and size-related projections and facts:
  - By 2019, the economy will more than double in size compared to 2009.
  - When adjusted for purchase price differences, India’s GDP will exceed that of Japan and Germany combined.
  - Indian output will exceed the combined output of Russia, Brazil, and Indonesia.
- Demographics and labor force:
  - More than 50 percent — share of India’s population currently below the age of 25.
  - More than 12 million — people entering the labor market every year.
  - By 2030, India is expected to have the largest labor force in the world.
  - At more than one billion people of working age — India’s projected working-age population.
- Policy frameworks highlighted as critical:
  - Fiscal policy: explicit medium-term consolidation path; recent Budget's emphasis on infrastructure spending is positive; further subsidy reform and implementation of the goods and services tax recommended.
  - Monetary policy: adoption of flexible inflation targeting welcomed to maintain price stability.
  - Financial sector: need for banks with strong balance sheets; higher capital injections and improved operational efficiency recommended; fiscal consolidation can help banks reorient from government securities to private lending.

### Making India’s growth more inclusive
- Overarching aim: ensure high growth translates into improved well-being, opportunity for traditionally excluded groups, and sustainability.

- (i) Unleashing the potential of women
  - Key statistics from IMF study “Women Workers in India: Why So Few Among So Many?”:
    - 33 percent — India’s female labor force participation rate.
    - 50 percent — global average female labor force participation rate.
    - 63 percent — East Asia average female labor force participation rate.
    - 125 million — number of working-age Indian females currently part of the labor force.
    - 380 million — total working-age Indian females.
    - 52 percent — India’s gender participation gap (difference between male and female labor force participation).
    - Declining — India’s female labor force participation rate has been on a declining trend since 2005.
  - Policy recommendations:
    - Remove legal and institutional barriers to facilitate women’s entry into the labor market.
    - Increase labor market flexibility to allow movement from informal to formal sector.
    - Support campaigns and policies promoting education and safety for girls and women.

- (ii) Increasing financial inclusion
  - Achievements and figures:
    - Under Jan Dhan Yojana, financial services extended to more than 125 million previously unbanked individuals.
  - Policy recommendations:
    - Use financial inclusion to deliver targeted cash transfers.
    - Expand access of small and medium enterprises to the formal financial system to boost investment and jobs.

- (iii) Investing in infrastructure
  - Need and scale:
    - By some estimates, an additional US$1 trillion in infrastructure investment is required over the medium-term.
  - Constraints and reforms needed:
    - Crowd in private investment through resolving public-private partnership issues.
    - Ease land acquisition, expedite clearances, and establish a stable regulatory regime to reduce delays from regulatory uncertainty and bureaucratic holdups.

### Conclusion
- Mutual need: “the world needs a vibrant India and India needs the world.”
- With growing economic size and power come expectations of greater leadership in global fora such as the G-20 and the IMF.
- IMF commitment: working on reforms to lift India to the top 10 shareholders at the IMF.
- Closing exhortation: India’s elements are aligned to become a global powerhouse — “This is India’s moment. Seize it. Chak De India!”

*Seizing India’s Moment, Christine Lagarde — Lady Shri Ram College, New Delhi, March 16, 2015.*

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## References

- [India and the IMF](http://www.imf.org/external/country/IND/index.htm)
- [People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)
- [Japan and the IMF](http://www.imf.org/external/country/JPN/index.htm)
- [United States and the IMF](http://www.imf.org/external/country/USA/index.htm)
- [United Kingdom and the IMF](http://www.imf.org/external/country/GBR/index.htm)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [Christine Lagarde](https://www.imf.org/external/np/omd/bios/cl.htm)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp031615_