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India needs to invest in education and health says IMF
Volatile global commodity prices can have a significant bearing on prospects in India: said IMF official Krishna Srinivasan
Krishna Srinivasan, IMF Director of the Asia and Pacific Department / Screengrab/ IMF briefing
Applauding India for successfully navigating multiple shocks in recent years, the International Monetary Fund has said that India needs to invest in education and health to benefit from its young population.
“In terms of what India could do to address the young population. Clearly, we have 15 million people being added to the labor force every year. If you want to really benefit, if India really wants to benefit from this population adding to the labor force, it has to invest big time in both education and health,” Krishna Srinivasan, Director of the Asia and Pacific Department at the IMF, told reporters at a news conference on the sidelines of the annual Spring Meeting of the IMF and the World Bank in Washington DC
“It's not just about population coming and you need the right kind of skills, you're going to face competition from AI and so on. So this labor force needs to be really equipped to deal with that challenge. I think investment in education and health, I would prioritize that much more so than other kind of spending for addressing this issue,” said the IMF official.
India, he said, is one country that has registered very strong growth of 6.8 percent, as projected by the IMF in 24-25. “India has successfully navigated multiple shocks in recent years and it's now one of the fastest growing major economies in the world,” he said.
“To a large extent, the 6.8 percent of what we project is led by private consumption and public investment. Now, as you are aware, India has put a lot of emphasis on CapEx spending in terms of building infrastructure; be it airports, roads, railroads and so on. That's clearly had a very beneficial impact on growth,” he added.
“The issue there is whether it has crowded in private investment. And what we have seen is until recently that wasn't happening much. So private investment is on the weaker side. But of late, we've seen some uptick in private investment, which augurs well going forward,” he said in response to a question.
“We also see consumption picking up with inflation coming down right now, inflation about 4.7 percent in India, it's close to the mid target of 4 percent. So inflation is coming down. We expect that to come down even further. That should provide a fill up to consumption going forward,” the IMF official said.
In terms of downside risks, he mentioned both short term and some medium-term risks. “In the short term, I would say volatile global commodity prices can have a significant bearing on prospects in India. Especially if oil prices rise a lot of then it can have an impact on India because India is a large oil importer, but goes beyond oil. But these food price shocks would also have an impact on economic prospects. Beyond the near term, you could have weather related shocks. You could have risks from geo economic fragmentation, which could provide both an up and down for India. Also any kind of trade frictions could also have bearing on in this prospects,” he said.
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