International Monetary Fund's Chief Economist Maurice Obstfeld praised India's fundamental economic reforms like the GST and the Insolvency and Bankruptcy Code carried out by the government, saying the country's growth has been “very solid” over the past four years. Speaking to the press, he said, “India under the government of Prime Minister Narendra Modi has carried out some really fundamental reforms. These include the Goods and Services Tax (GST), the Insolvency and Bankruptcy Code... A lot of what they have done on financial inclusion has been really important,” Obstfeld said.
He also said the country's “growth performance has been very solid. I mean, not much in the third quarter of this year, but generally it has been quite solid. There are important vulnerabilities, so it is important for the reform momentum to be maintained even as an election comes up and for the path of fiscal adjustment to be maintained.” Obstfeld said that one risk that has become much more evident in the last few years has been non-bank finance, usually called shadow banking. “There is a big challenge of stricter, oversight.” Noting the legacy of corporate debt associated with bad infrastructure projects in India, he said it has been very concentrated in banking system. “But as the government is trying to better oversee the banking system, these loans have migrated to shadow banking and that is an area where more needs to be done to contain financial pressures, which we are beginning to see in India.”
Obstfeld, 66, is set to retire this month-end and will be succeeded by Gita Gopinath, the second Indian to be appointed to the position. Former RBI Governor Raghuram Rajan had served as Chief Economist of the IMF.
