India's eco growth to remain robust; GST reform to help cushion adverse impact of US tariffs: IMF
New York/Washington (PTI): India's economy is estimated to grow at 6.6 per cent in 2025-26, the International Monetary Fund said, noting that the Goods and Services Tax reforms are likely to help cushion the country from the adverse impact of the 50 per cent tariffs imposed by the US.
"India’s economy has continued to perform well. Following the economic growth of 6.5 per cent in fiscal year 2024/25, real GDP expanded by 7.8 per cent in the first quarter of fiscal year 2025/26," the IMF said in a statement after its Executive Board completed an annual assessment for India.
The International Monetary Fund (IMF) said that looking ahead, India’s ambition to become an advanced economy can be supported by advancing comprehensive structural reforms that enable higher potential growth.
Despite external headwinds, growth is expected to remain robust, supported by favourable domestic conditions, it added.
"Under the baseline assumption of prolonged 50 per cent US tariffs, real GDP is projected to grow at 6.6 per cent in FY2025/26 before moderating to 6.2 per cent in FY2026/27," the IMF said.
The GST reform and the resulting reduction in the effective rate are expected to help cushion the adverse impact of tariffs, it pointed out.
The US has imposed 50 per cent tariffs on India, including 25 per cent for its purchases of Russian energy.
The IMF, however, noted that there are significant near-term risks to the economic outlook. On the upside, the conclusion of new trade agreements and faster implementation of structural reform domestically could boost exports, private investment, and employment.
On the downside, further deepening of geoeconomic fragmentation could lead to tighter financial conditions, higher input costs, and lower trade, FDI, and economic growth. Unpredictable weather shocks could affect crop yields, adversely impact rural consumption and reignite inflationary pressures, it added.
Headline inflation is projected to remain well contained, reflecting the one-off effect of the GST reform and continued benign food prices. "Headline inflation has declined markedly, driven by subdued food prices", the IMF said.
It noted that the financial and corporate sectors have remained resilient, supported by adequate capital buffers and multi-year low non-performing assets. Fiscal consolidation has advanced, and the current account deficit has been contained, supported by resilient service exports.
IMF Executive Directors commended India's strong economic performance and resilience, which has benefited from sound macroeconomic policies and reforms. Amid high uncertainty, the Directors called for continued sound policies and noted that accelerated implementation of structural reforms will be critical to maintain stability and support India’s ambition of becoming an advanced economy.
They concurred with the authorities' plans for continued fiscal consolidation this year, while noting that achievement of the fiscal deficit target will require strong spending discipline. While welcoming the recent simplification of the GST, they called for careful monitoring of the fiscal impact of the reduction in GST and personal income tax rates.
The Directors also recommended that tariff relief measures should be targeted, transparent, and time-bound, and that the pace of fiscal consolidation in FY2026/27 should be conditional on the impact of tariffs on the output gap.
For the medium term, they stressed that fiscal buffers should be replenished by focusing on domestic revenue mobilisation, while also raising the efficiency of expenditure, including through a more targeted social safety net. Enhancing fiscal sustainability at the state level, as well as carefully monitoring contingent liabilities, would also be important.
The Directors felt that, if tariffs persist at current levels, there would likely be scope for further monetary easing amid benign inflation dynamics. They broadly recommended continued efforts to enhance monetary transmission, as well as greater exchange rate flexibility to help the Indian economy absorb external shocks, with interventions aimed at addressing disorderly market conditions consistent with the integrated policy framework.
The IMF underscored that comprehensive structural reforms are critical to support India’s economic development.
Directors welcomed the recent labour market reforms and encouraged the authorities to enhance human capital and female labour force participation, continue with the public investment push, and strengthen the business environment.
They stressed that the deepening of trade integration can bolster India’s competitiveness and attract FDI. Investment in R&D and fostering innovation will also help support productivity-driven development. Advancing the green transition supported by greater access to concessional financing will also be important for promoting sustainable and resilient growth.
Directors highlighted that India’s financial system has been sound, supported by strong capital and liquidity positions. They encouraged the authorities to mitigate vulnerabilities among nonbank financial institutions and cautiously monitor risks from concentration and rising financial sector interconnectedness. They also encouraged authorities to make further progress on financial structural reforms.
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Congress committed to social justice, says Karnataka CM; hits out at JD(S), BJP
BJP Bengaluru (PTI): Karnataka Chief Minister Siddaramaiah on Sunday asserted that the Congress remains firmly committed to social justice, both in principle and practice.
"The Congress is a party committed to social justice. This ideological commitment has been demonstrated not merely through words but through action," the CM said in a statement, underlining that the party has consistently translated its philosophy into governance.
He said his recent article marking Social Justice Day has sparked debate.
Defending the piece, he said: "An article I wrote for a newspaper as part of Social Justice Day celebrations has sparked multifaceted debate in the state’s political circles. If water remains stagnant, it turns into slush; if it flows, it becomes clearer."
"The social system is similar—if it does not remain rigid and instead becomes dynamic, it transforms in a people-centric manner. From this perspective, I welcome the discussion surrounding my article," he added.
Stating that his commitment to social justice is longstanding, the CM said, "Whether in power or out of it, my stand in favour of social justice has remained unwavering. I have greater clarity about the caste system among us than the politicians criticising me."
"I am prepared for a public debate on this issue," Siddaramaiah added.
Responding to criticism from Union Minister and Janata Dal (Secular) leader H D Kumaraswamy, he said, "I have taken his allegation—that I have ‘dragged caste into the picture for the sake of a chair’—lightly."
Launching a sharp attack on JD(S) patriarch and former Prime Minister H D Deve Gowda and his family, Siddaramaiah added, "Kumaraswamy and his revered father Deve Gowda are certainly not casteists; they are against their own caste. More importantly, they are family-centric. For them, caste is merely a vote bank."
He alleged that past, present, and future top JD(S) leaders would always be members of the Gowda family, questioning how many Vokkaliga leaders the party had nurtured during Deve Gowda’s long political career.
The CM maintained that it was the Congress that had identified and politically groomed Vokkaliga leaders.
"From Kengal Hanumanthaiah to S M Krishna, hundreds of Vokkaliga leaders have been nurtured. If Kengal Hanumanthaiah, Kadidal Manjappa, and S M Krishna became chief ministers, it was because of the Congress," he said, adding that several prominent Vokkaliga leaders are currently in the party.
"If one day anyone other than a member of Deve Gowda’s family becomes chief minister, it will be through the Congress," he noted.
Highlighting inclusivity, Siddaramaiah said the Congress has enabled leaders from Vokkaliga, Lingayat, and backward communities to become chief ministers in Karnataka, and expressed gratitude to party leaders Sonia Gandhi and Rahul Gandhi for giving him a second term.
He added that leaders from the Dalit community who rise to the CM's post do so on merit, not merely caste. "I can confidently say that if someone from the Dalit community becomes chief minister in the future, it will be possible only through the Congress,” he reiterated.
He questioned whether the JD(S) or the BJP in the state is capable of fostering such aspirations. "This is the difference between the Congress, the BJP and JD(S). Therefore, I urge those accusing me of practising caste politics to introspect," the CM said.
