India needs to accelerate reforms: IMF

The statement comes a day after RBI reduced interest rates by 0.50 per cent to arrest declining growth.

“A major challenge will be to bring growth back to potential and ensure its inclusiveness,while further lowering inflation… This will require a reinvigoration of structural reforms and fiscal consolidation,” IMF said after its annual discussion with the Indian government termed as Article IV Consultation.

Indian economy was growing at over 9 per cent before the global financial crisis in 2008 pulled it down to 6.7 per cent in 2008-09. The growth rate in 2011-12 touched a 3-year low of 6.9 per cent on account of factors like high commodity prices,slowdown in domestic demand and RBI’s tight money policy.

“Growth risks are to the downside. The main domestic risk is a further weakening of private investment if government approvals do not accelerate,reform efforts are not reinvigorated,and inflation remains high and volatile,” the IMF said.

In its World Economic Outlook released yesterday,the IMF has projected a moderation in the GDP growth of the world economy and said that Indian economy will grow by 6.9 per cent in the calendar year 2012.