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The International Monetary Fund’s (IMF) Asia and Pacific Department’s Acting Director Anne-Marie Gulde-Wolf said that the surge in oil prices due to the Ukrainian war has pushed up inflation in India, which needs monetary tightening and measures to address structural weaknesses to improve growth potential. She said according to estimates, the country's economy is likely to grow at 8.2 per cent in 2022-23, down 0.8 per percentage points. She added ‘So while still strong, it is a significant downgrade. We really see the difficult policy tradeoff for policymakers supporting the worldwide controlling of inflation, which has already started going up’.

She said ‘the reason why inflation has gone up is really the spillovers from the war in Ukraine, where India is particularly dependent on oil and commodity imports’. She added ‘in the short run, we think a commodity fiscal stance is appropriate, supporting vulnerable households and putting focus on infrastructure investment’. She recommended monetary tightening and measures to check structural weaknesses. She also said ‘well-communicated monetary policy actions are needed but probably some monetary tightening’.

She further said ‘to enhance India's growth potential, it is important to address structural weaknesses of the Indian economy that provide bottlenecks to achieve longer-lasting growth. These bottlenecks are in the labour market, land market, better educational outcomes, and very much also getting higher share of females into the labour force’. She said ‘so, in sum, the potential is definitely there but it will require policy actions’.