According to a recent report by Asia Lite, the International Monetary Fund (IMF) has placed high hopes on India for global economic revival. The country is currently a relative "bright spot" in the world economy and is expected to contribute significantly to global growth in 2023.

The IMF's World Economic Outlook report, titled 'A Rocky Recovery,' predicted that India's economy would grow by 5.9% this year. However, during a press briefing, IMF economist Daniel Leigh said, "We realized that 2020-2021 has been actually a lot better than we thought," in response to a question from the media.

India's sustained growth momentum can be attributed to a combination of digitization and prudent fiscal policy. Significant financing for capital investments provided in the next year's budget is also expected to help keep the growth momentum going.

In a recent statement, IMF Managing Director Kristalina Georgieva said, "India's performance has been quite impressive. For this year, we expect India to retain a high growth rate, 6.8 percent for the year that ends in March. For FY 2023/24 (April 2023 to March 2024) we project 6.1 percent, a bit of a slowdown like the rest of the world economy, but way above the global average. And in that way, India is providing about 15 percent of global growth in 2023."

To compare the quantitative impact of different forces, the IMF relied on a macroeconomic model called PP, based on Platzer and Peruffo's (2022) research. However, this model abstracts from nominal and financial frictions and assumes away uncertainty, making it ill-equipped to analyze the impact of financial drivers. Nonetheless, the model still allows for foreign developments to affect domestic interest rates through their implication for net international capital flows.

During a meeting with government officials, a spokesperson for the IMF said, "PP is calibrated to represent eight major global economies: the United States, Japan, Germany, the United Kingdom, France, China, India, and Brazil. These are the five largest advanced economies and the three largest emerging market and developing economies, which cover some 70 percent of global GDP."

The spokesperson also mentioned that country-specific calibrations are based on demographic developments, the age-earning profile, the share of income going to the richest 10%, productivity trends, the retirement age, average pension replacement rates, labor share, government debt, and public expenditure.

Overall, despite some discrepancies between the IMF and Indian presentations regarding disinvestment and license-auction proceeds, net versus gross recording of revenues in certain minor categories, and some public sector lending, India's economy is poised for significant growth in the coming years.