The IMF has suggested a 3-pronged approach for structural reform in India that includes
1.Addressing the banking and corporate sector weaknesses,
2.continued fiscal consolidation through revenue measure, and
3.Improving the efficiency of labour and product markets.
1.To address the corporate and banking sector weaknesses: by hastening the resolution of non- performing loans, renew the capital buffers for the public sector banks, and enhancing banks' debt recovery mechanisms.
2.India should persist on with the fiscal consolidation through revenue measures, as well as further decline in subsidies.
3.To continue the strong momentum for structural transformation in addressing the infrastructure gaps, improving the efficiency of product and labour markets as well as advancing agricultural reforms.
Along with three structural reforms, IMF also suggested reforming the market regulations to create a more favourable environment for employment and investment.
IMF also emphasized on to cut down the number of labour laws which currently number around 250 at central and state level.
IMF's Regional Economic Outlook
IMF in its report said that India’s growth were sluggish in recent quarters due to the disruptions happened through demonetisation move that took place in November 2016, and the recent roll-out of the Goods and Services Tax (GST).
The report, however, also suggested that the growth in 2017 was revised downward to reflect the recent slowdown, but is likely to speed up in the medium term as these disruptions fade.
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