IMF Praises India’s “Strong, Resilient” Economy

By CitiTimes Editorial Desk

Washington, DC, November 28, 2025

The IMF’s latest review, published on November 26, 2025, highlights India’s robust growth, progress on labour reforms, and the global risks ahead — a simple breakdown of what it means for policymakers, investors, and citizens.

What is an IMF Article IV Consultation?

Every year, the International Monetary Fund (IMF) holds what’s called an Article IV Consultation with its member countries.

– Think of it as an annual economic check-up.

IMF economists visit the country, meet with government officials, and analyze policies, growth, inflation, and financial stability. They then publish their findings, which serve as both an assessment and a set of recommendations.

For India, this consultation is critical because of its size and role as one of the fastest-growing major economies.

Key Observations from the 2025 IMF Review of India

The IMF’s Executive Board concluded its 2025 Article IV Consultation with India and highlighted several important points:

India’s economy grew by 6.5% in FY2024/25, and an even faster 7.8% in the first quarter of FY2025/26. It shows resilience despite global challenges.
Inflation has dropped significantly, mainly because food prices have softened. It is good news for households and businesses.
Banks and corporations are in solid shape, with strong capital buffers and historically low levels of bad loans.
The government has made progress in reducing its fiscal deficit, but the IMF stressed that strict spending discipline is needed to meet targets and build more substantial budgetary buffers.
India’s current account deficit remains contained, thanks to robust service exports like IT and business outsourcing.
The IMF warned of challenges from US tariffs, global fragmentation, and weather shocks. These could slow growth if not managed carefully.
The IMF urged India to maintain fiscal discipline, allow monetary flexibility, and accelerate structural reforms to support long-term goals of becoming an advanced economy.

IMF Managing Director Kristalina Georgieva addresses the Plenary Session of the 2025 Annual Meetings of the World Bank Group and International Monetary Fund in Washington, DC, on October 17, 2025. IMF Photo/Joshua Roberts.

️Risks & Cautions: What the IMF says India should watch out for

Even as the IMF lauds India’s performance, it also highlights several risks and areas that merit caution or further effort. These include:

Global headwinds and external risk — The IMF notes that geo-economic fragmentation (i.e., global trade tensions, supply-chain disruptions), volatile global commodity prices (e.g., oil), and uncertain external demand remain key risks to India’s growth outlook.
Need for continued fiscal discipline and reform momentum — To maintain macroeconomic stability, the IMF implicitly recommends that India stay prudent in budgetary policy and continue structural reforms. It aligns with previous Article IV reviews, which emphasized debt management, transparency, and the sensible use of fiscal buffers.
Challenges on domestic demand and investment recovery — The IMF has previously flagged (and continues to monitor) the potential for a weaker-than-expected recovery in private consumption and investment, which could weigh on medium-term growth.
Structural constraints — While labour reforms are welcome, bigger structural change (in labour laws, social safety nets, public-finance frameworks) remains necessary to unlock India’s long-term growth potential fully.

Reserve Bank of India Governor Sanjay Malhotra speaks at the IMFC Plenary Session during the 2025 Annual Meetings of the World Bank Group and International Monetary Fund in Washington, DC, on October 17, 2025. IMF Photo/Ariana Lindquist.

What this means for India — for policymakers, investors, and citizens

For policymakers: The IMF view should encourage continued pursuit of structural reforms — especially in labour markets, fiscal framework, and investment climate. It supports the narrative that India’s “reform-plus-resilience” strategy is working.
For investors and markets: The optimistic growth projections and the IMF’s endorsement lend credibility to India’s macro-economic trajectory, reducing perceived risk. It could attract domestic and foreign investment, especially if reforms deepen.
For ordinary citizens & businesses: Sustained growth — if managed carefully — could translate into more jobs, better incomes, and improved economic stability. The labour reforms, if implemented well, could make it easier for businesses to hire and expand.

Why the 2025 consultation matters differently

Compared to past years, this year’s consultation stands out because:

India is nearing the growth levels that place it firmly among the top-tier large emerging economies, even as the global economy remains fragile.
The consultation comes at a time when India is implementing sweeping labour reforms and navigating a shifting global trade and commodity-price environment — making the IMF’s endorsement especially significant.
The willingness of Indian authorities to publish the full staff report reflects increasing transparency and signals confidence in domestic economic management.

Why This Matters for Everyday Readers

For non-specialists, the takeaway is simple: India’s economy is doing well—growing fast, keeping inflation low, and maintaining financial stability. But the IMF is reminding policymakers not to get complacent. Global risks are real, and India needs to keep strengthening its fiscal position and pushing reforms to stay on track.

In short, despite global uncertainties, India is being credited with weathering external shocks well, maintaining robust growth, and advancing structural reforms to enhance its long-term potential.

This consultation is not just about numbers; it’s about ensuring that India’s growth remains sustainable, inclusive, and resilient in a turbulent global environment.