Make rapid progress on reforms: IMF to India

International Monetary Fund has urged India to make rapid progress on a broad range of reforms to achieve ambitious goals of creating jobs and reducing poverty.

The IMF Annual Report on India said the financial agency, in its policy dialogue with Indian authorities during the financial year 2005 'stressed the need for rapid progress on a broad range of reforms to enable India to build on recent successes and realise its ambitious objectives-- especially creating jobs and reducing poverty'.

It also urged the authorities to pursue fiscal adjustment, pre-empt inflationary pressures, accelerate trade liberalisation and labour market reform, and further open the financial sector.

Authorities 'are taking steps to address these issues. They remain committed to meeting the medium-term targets of the fiscal responsibility law," it said.

India has appropriately tightened monetary policy, lowered tariffs, opened up important sectors to foreign direct investment, and announced a roadmap for banking reform, the annual report said.

In addition, India participated in a pilot study on public investment, which stressed on the need to raise public savings, further improve the management of the public investment programme, strengthen capital markets, address regulatory risks that limit private participation, and improve the accounting and reporting of debt-like obligations that arise under off-budget schemes for infrastructure funding, it noted.

The annual report noted that India also received technical assistance from IMF's Fiscal Affairs Department in setting up a state fiscal database and debt register, which will be critical in allowing the authorities to fashion a programme for fiscal reform at the state level.

The Fund stressed the need, in the short term, for India to develop the ability to consolidate states' accounts and, in the medium term, for the country to move to a computerised integrated financial management system.

On emerging market countries, the Fund said such nations could be exposed to future external shocks.

"These countries should use the favourable financing environment to increase their resilience and press ahead with growth-enhancing structural reforms. Measures to reduce public debt to manageable levels and to improve the structure of public debt remained key priorities for many emerging markets," it said.