IMF/World Bank Spring Meetings: What Can We Expect from India?
As the International Monetary Fund (IMF) and World Bank Spring Meetings begin on April 10 in Washington, the ether is full of words like climate, digital economies, debt restructuring, trade, women entrepreneurship, and food security. Going into the conversation, India is expected to have three priorities: presenting its digital transformation model, mobilizing green finance, and leading the conversation on debt restructuring as G20 president this year.
India-IMF/World Bank Overview
The Indian delegation will be headed by the country’s finance minister, Nirmala Sitharaman, and will also see attendance from the Reserve Bank of India (RBI) governor, Shaktikanta Das. Leadership at the IMF and World Bank has largely been optimistic about India’s macroeconomic trajectory. India is posited to be one of the fastest growing large economies and has shown mettle in managing its inflation rates. However, India will be defending slight downfalls in its economic indicators. For instance, India’s 2023 GDP growth forecast was recently downgraded to 6.3 percent from the December 2022 forecast of 6.6 percent. This is in line with RBI’s forecast of 6-6.8 percent growth in 2023. The upside is that the growth rate in 2024 is expected to climb to 6.8 percent. In comparison, emerging market and developing economies are projected to grow at 4 percent in 2023, and 4.2 percent in 2024. With food inflation being a critical issue, the recent easing of inflation (expected at 5.2 percent) could also be a topic of discussion.
India has made rapid strides in its attempt to digitize the economy. General digitization efforts—the Unique Identification Authority of India (Aadhar), the Unified Payment Interface (UPI), and the Ayushman Bharat Digital Mission (ABDM), among others—have demonstrated the country’s potential in scaling digital public services. India Stack, a unique project through which the government is providing open Application Programming Interfaces (APIs), and public digital infrastructure have been effective in building an inclusive digital economy.
The IMF recently released a working paper titled “Stacking up the Benefits: Lessons from India’s Digital Journey,” which unequivocally praised India’s digital transformation journey. Additionally, with various seminars on digital public infrastructure—and one session dedicated to the “India story” on April 10—the delegation will get ample time to speak about the country’s model. Therefore, the meetings will act as the perfect springboard for India to further its “digital diplomacy,” through offering its open-source public digital infrastructure to other developing countries.
At COP27, India committed to mobilizing green finance. The Spring IMF/World Bank Meetings through several sessions focused on climate finance, including ones on mobilizing private finance, sustainable development finance, and developing human capital for green transition, will provide the country an opportunity to build consensus. There are concerns over the cost of green finance from developing countries. We can expect India to raise these concerns, and potentially find solutions to making green credit cheaper. This is line with the statements from India’s Sherpa to G20, Amitabh Kant, as the country looks to elevate itself to 500GW renewable energy generation by 2030. The IMF too has been receptive to the concerns over expensive green finance in emerging economies. However, whether or not there can be any concrete action remains to be seen.
Debt Restructuring for G20 Diplomacy
World Bank President David Malpass recently stated that India, the IMF, and the World Bank will work on addressing debt restructuring challenges for emerging economies. This comes in the context of multiple emerging economies struggling to show post-pandemic recovery. This is as Covid-19 related increases in public spending exacerbate the external debt woes of several nations. Even in India’s own backyard, two economies—Sri Lanka, and Pakistan— are facing external debt crises and are relying on the IMF for interim respite. Added to the caveat is China. With China playing a role in both the countries’ crises, India will gain additional diplomatic leverage if it can successfully clean up China’s messes.
As the current president of the G20, India can post a major victory if it is able to seek some relief for member debtor countries. An opportunity will present itself on April 14, when the IMF meets with India, China, and Paris Club members to discuss bottlenecks in the debt restructuring process. Borrowing countries that will participate in the session include Ghana, Ethiopia, and Zambia.
Various timely global issues are on the table. With New Delhi increasingly expanding its global diplomatic efforts, the meetings can act as the perfect show stage. However, this will be dependent on the India’s ability to maneuver institutional inertia.
Akshat Singh is a research associate for the Chair in U.S.-India Policy Studies at the Center for Strategic and International Studies (CSIS), Washington, DC.
Yatin Jain is a program coordinator/research assistant for the Chair in U.S.-India Policy Studies at the Center for Strategic and International Studies (CSIS), Washington, DC.