The International Monetary Fund (IMF) is keen to see a surge in foreign direct investments (FDI) into India. Towards this end, a favourable business climate will be helpful going forward, the visiting IMF Managing Director, Ms Christine Lagarde, said here on Tuesday.
Ms Lagarde's remarks come at a time when the Government is faced with stiff resistance from Opposition parties to opening up the multi-brand retail sector and increasing FDI in insurance and pension sectors.
At the same time, the IMF sees India continuing on the path of fiscal consolidation as a good sign. “We are encouraged that there is determination to bring a new direct taxes code. There is determination to cap subsidies at 2 per cent, and our sense is that the Finance Ministry wants to deliver on these commitments,” Ms Lagarde said at a press conference at the end of her two-day visit to India.
She also said that support for capital investments in areas like infrastructure was critical to unleash India's growth potential. The IMF has forecast a GDP growth of seven per cent for India next year. For China, the forecast is 8.25 per cent.
Ms Lagarde met the Prime Minister, Dr Manmohan Singh; the Finance Minister, Mr Pranab Mukherjee; and the Commerce and Industry Minister, Mr Anand Sharma.
On global economic outlook, Ms Lagarde said that it was not in as bad a situation as it was three months ago. There have been some significant improvements, driven by the actions of European Central Bank and some member countries of the European Union.
“This is not to say that fragility has been removed. The vulnerabilities have to be addressed. The crisis is not behind us. But we have avoided the recovery from getting derailed for the moment,” she added.
The IMF chief said that global crude oil prices may rise 20-30 per cent if Iran supplies are disrupted. Any sudden climb in prices will have serious consequences on the global economy, especially on oil importing countries, she said.