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Indian Economy: IMF has once again praised the fast pace of India’s economy. Also said that America tried to slow it down by imposing 50 percent tariff, but India neutralized its effect by reducing GST.
New Delhi. The International Monetary Fund (IMF) has once again sung praises of the Indian economy. The world’s most trusted and prestigious organization has even said that even though America had imposed 50 percent tariff on India, its effect has been neutralized by taking steps like GST reform. Now there is no hesitation in saying that the Indian economy is continuously performing well and its fast growth rate is showing no sign of stopping at the moment.
IMF has said that India’s economic growth rate is estimated to be 6.6 percent in the financial year 2025-26. Additionally, he also said that the Goods and Services Tax (GST) reforms are expected to help the country deal with the adverse impact of America’s 50 percent import duty. India’s economy continues to perform well, the IMF said after its Board of Executive Directors completed its annual assessment for India. After economic growth of 6.5 percent in FY 2024-25, real GDP grew by 7.8 percent in the first quarter of FY 2025-26.
Country growing due to fundamental reforms
The IMF said India’s ambition to become a developed economy in the future can be supported by pursuing comprehensive structural reforms. This will pave the way for higher potential growth. The IMF said that despite external challenges, economic growth is expected to remain strong, supported by favorable domestic conditions. The IMF said that assuming 50 percent US tariffs remain in place for a long time, real GDP growth is expected to grow at 6.6 percent in fiscal year 2025-26, which will decline to 6.2 percent in fiscal year 2026-27.
New trade deal is paving the way
According to the Monetary Fund, the GST reform and the resulting effective rate reduction are expected to help mitigate the adverse impact of the duty. America has imposed 50 percent duty on India, which also includes a penalty duty of 25 percent on energy purchases from Russia. The IMF said that there are also significant risks to the economic outlook in the near future. The positive side is that new trade agreements and faster implementation of infra reforms domestically can boost exports, private investment and employment. However, there is a need to be cautious on some fronts. The downside is that financial conditions may become tighter as global economic fragmentation deepens. The cost of raw materials may increase and trade, foreign direct investment (FDI) and economic growth may decline.
RBI helpful in reducing the impact of tariffs
Reserve Bank of India Deputy Governor Poonam Gupta has said that the central bank uses various models and expert discussions to arrive at its inflation estimates. Lower retail inflation creates scope for cutting interest rates, which helps in reducing the impact of US tariffs. He said a rate cut would have been helpful for the economy and potentially mitigate the impact of US tariffs.
