08.08.201801:30:00UTC+00IMF Says India's Growth Prospects Look Bright

Driven by the implementation of recent polices, India's economy is picking up and growth prospects look bright, according to International Monetary Fund.

Ranil Salgado, the head of the IMF team for India, said India's economy is forecast to pick up to about 7.3 percent for the fiscal year starting April 2018 from 6.7 percent a year ago.

At the same time, inflation edged higher partly due to a reduction of economic slack.

The goods and services tax should improve productivity and boost medium-term potential growth, while also creating room for the government to increase much needed social and infrastructure spending, Salgado said.

India needs to reinvigorate reform efforts to keep the growth and job engine running, he added.

Further, the IMF observed that huge government debt and budget deficit were key macroeconomic challenges.

On the banking sector, the IMF called for independence of public sector banks. Salgado said privatization could eventually be considered.