According to a top International Monetary Fund (IMF) official, the spike in oil prices caused by the Ukrainian war has driven up inflation in India, which requires monetary tightening and structural reforms to improve economic potential.

According to estimates, the country's economy will grow at 8.2% in 2022-23, down 0.8 percentage point from the previous year, according to Anne-Marie Gulde-Wolf, Acting Director of the International Monetary Fund's Asia and Pacific Department.

"It's a huge downgrade, despite the fact that it's still robust. We can clearly see the difficult policy trade-off that policymakers must make in order to support global inflation control, which has already begun to rise "At a press conference here, she told reporters. "The cause for the rise in inflation is basically the spillovers from the crisis in Ukraine," she added, noting that India is particularly reliant on oil and commodity imports.

In the immediate term, we believe a balanced fiscal stance is appropriate, assisting disadvantaged people while focusing on infrastructure investment, according to an IMF official replying to a query. She urged for monetary tightening as well as actions to address structural flaws.

"Well-communicated monetary policy actions are required," she noted, "but monetary tightening is likely." "To maximise India's growth potential, structural flaws in the Indian economy that create bottlenecks must be addressed in order to achieve longer-term growth. These bottlenecks can be found in the labour market, the land market, better educational outcomes, and a bigger proportion of women in the workforce "explained an official from the International Monetary Fund.

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