IMF applauds India’s GDP data revamp, says country entered energy shock with strong fundamentals

On Thursday, the International Monetary Fund (IMF) praised India's revamped GDP data, stating that the country entered an energy shock with strong fundamentals and has responded well to it. Krishna Srinivasan, Director of the IMF's Asia and Pacific Department, explained that India's strong domestic growth should not be read as a sign of economic failure despite pressure from external markets.

Srinivasan revealed that the IMF raised India's growth forecast to 7% for the current year and next, and 6.9% over the medium term, due to the stronger-than-expected performance in the April-June quarter. The revised GDP growth for the same period was put at 7.8% by the Ministry of Statistics and Programme Implementation (MoSPI).

The IMF's World Economic Outlook, released on Tuesday, indicated that India remains one of the fastest-growing major economies, driven by resilient domestic demand, strong services activity, favorable demographics, a large and growing domestic market, and continued structural reforms. India stands out among major economies in not requiring additional fiscal consolidation to maintain its debt ratio at 2025 levels.

The exchange rate pressure faced by India is not indicative of a real disconnect with growth, according to Srinivasan. The exchange rate is influenced by global interest rates, investor risk appetite, and oil prices, as India is an oil importer. The IMF assumes oil at around $96 a barrel in 2026, and the Strait of Hormuz reopening from March 2027.

Regarding the revisions to India's GDP numbers, Srinivasan explained that the authorities have issued a note clarifying the changes, which are consistent with the IMF's advice, including from its statistics department. The MoSPI released a new GDP series with 2022-23 as the base year, replacing 2011-12, on February 27.