India's growth rate didn't match increase in jobs: IMF

UNITED NATIONS:

The International Monetary Fund (IMF) has said that India's high growth rate in recent years did not lead to a matching increase in formal sector jobs and labour market participation has declined.

The IMF's report on its annual consultations with India released in Washington on Monday said that while India has lifted millions out of poverty as one of the world's fastest-growing economies, "recent labour market data suggests that unemployment is high while labour force participation has decreased, particularly for females."

"Without more inclusive and sustainable growth, India's potential demographic dividend over the next few decades, from its young and rapidly-growing labour force, could be wasted," the report warned.

The report pinned the slowing growth of the Indian economy on the deceleration of consumption and investment that was made worse by regulatory uncertainty. It said the relatively low food prices contributed to "rural distress".

The IMF Mission Chief for India, Ranil Salgado, said that other contributing factors included the "abrupt reduction in non-bank financial companies' (NBFC) credit expansion and the associated broad-based tightening of credit conditions'" and some issues with implementing "important and appropriate structural reforms, such as the nation-wide goods and services tax (GST)."

He said that India is now in the midst of a significant economic slowdown and the IMF was revising downwards the growth projections it had made of 6.1% for the current year and 7% for the next year.

On a positive note, the IMF report said, "Over the medium term, growth is projected to gradually rise to its medium-term potential of 7.3%" helped by a firming in investment and private consumption in the second half of the fiscal year.