A 3-way approach to structural reform in India has been suggested by the International Monetary Fund (IMF). It includes addressing the corporate and banking sector weaknesses, continued fiscal consolidation through revenue measure, and improving the efficiency of labour and product markets.
The 1st priority here is to address the corporate and banking sector weaknesses. This is done by accelerating the resolution of non- performing loans, rebuilding the capital buffers for the public sector banks, and enhancing banks debt recovery mechanism.
Following the same, India should continue with the monetary incorporation through revenue measures, as well as further reductions in subsidies.
Lastly, to maintain a strong impulse for structural reforms in supporting the infrastructure gaps, improving the efficiency of labour and product markets as well as taking care of agricultural reforms.
As per IMF’s Regional Economic Outlook, India’s growth decreased in recent quarters. Due to the temporary failure of the currency exchange initiative i.e. demonetization that took place in November 2016, and the recent disclose of the goods and services tax (GST).