IMF supports India's current economic reforms

Washington: The International Monetary Fund (IMF) has said it broadly supports the direction of India's economic reforms undertaken by the government led by Prime MInister Narendra Modi.

"We have been broadly supportive of the reforms being undertaken by Modi's government," IMF spokesman Gerry Rice told media persons here late Thursday.

"We have been broadly supportive that those reforms are in the right direction," he added.

In a report released earlier in the day, the IMF said that in a global "environment of increased uncertainty", India's growth will benefit from recent policy reforms, a consequent pickup in investment, and lower commodity prices.

"Strong domestic demand in India should also be a positive factor in 2016," the IMF said in its latest report on global prospects and policy - "IMF Developments, Outlooks, Risks".

In a noting relevant for India, the report said: "In many net commodity importers, lower commodity prices have alleviated inflation pressure and reduced external vulnerabilities."

"Emerging-economy growth is projected to rebound in 2016, reflecting mostly a less deep recession or an improvement of conditions in countries in economic distress (e.g., Brazil, Russia, and some countries in Latin America and the Middle East)," it said.

"However, growth remains fragile and could be derailed if transitions are not successfully navigated. In an environment of declining commodity prices, reduced capital flows to emerging markets, and higher financial market volatility, downside risks to the outlook remain elevated, particularly for emerging economies," it added.

The IMF forecast last month that overtaking China, India is expected to grow at 7.3 percent in 2015, rising to 7.5 percent in 2016.

At this rate, India will grow faster than China where the economy is expected to slow down from 7.3 percent to 6.8 percent in 2015 and 6.3 percent in 2016.