The International Monetary Fund has urged India to remain focused on a medium-term fiscal consolidation path, backing the government’s budget strategy and calling for sustained efforts to rebuild fiscal buffers. The comments come amid India’s continued strong economic performance and an upgraded growth outlook by the Fund.
Speaking at a press conference in Washington on Thursday, IMF Communications Director Julie Kozack said the Fund was encouraging India to stay committed to fiscal consolidation over the medium term. She said such an approach would help free up resources currently tied to debt servicing and allow greater flexibility for priority spending over time.
The IMF welcomed the direction of the Union Budget, particularly its attempt to balance gradual fiscal consolidation with continued public investment. Kozack said the Fund supports the focus on maintaining critical capital expenditure while pursuing deficit reduction, noting that the approach applies to both the central government and state governments.
The remarks reflect the IMF’s assessment that sustained fiscal discipline, alongside capital spending, is essential to preserve macroeconomic stability and support long-term growth. The Fund has consistently underlined the importance of rebuilding fiscal buffers to enhance resilience, especially in an environment of global economic uncertainty.
Kozack also highlighted India’s strong economic performance, describing the country as a key engine of global growth. She said the IMF had upgraded India’s growth projections in its January edition of the World Economic Outlook. According to the revised estimates, India’s real GDP growth for the 2025-26 fiscal year is projected at 7.3%, a significant upward revision from earlier forecasts.
The upgrade reinforces India’s position among the fastest-growing major economies at a time when global growth remains uneven. The IMF has attributed India’s resilience to a combination of domestic demand, public investment and structural reforms, even as many economies face tighter financial conditions.
Beyond fiscal and growth indicators, Kozack referred to India’s engagement in emerging technologies, noting the participation of the IMF’s Managing Director in the India AI Impact Summit. She said the Fund’s leadership was keen to engage with entrepreneurs, the technology sector and Indian authorities to understand India’s progress and potential in artificial intelligence.
India has remained one of the world’s fastest-growing large economies despite global headwinds, including geopolitical tensions and monetary tightening in advanced economies. The IMF has repeatedly stressed that maintaining fiscal prudence, pursuing structural reforms and sustaining investment in infrastructure and technology are critical to preserving growth momentum.
The Fund’s latest assessment delivers a calibrated message: support growth through investment while steadily reducing fiscal vulnerabilities to create space for future development priorities.
