IMF’s World Economic Outlook (April 2025) presents a sobering narrative of mounting global economic fragility, characterised by tariff-induced uncertainty, stalling disinflation, and diminished policy buffers, that India must navigate with strategic finesse. While global growth is forecast to decline to 2.8% this year, India remains a relative outperformer with a projected 6.2% growth, albeit revised downward due to global headwinds. Inflationary pressures that have been aggravated by a 22.8% spike in gas prices and rising food costs necessitate vigilant monetary policy, while India’s fiscal deficit of 5.1% of GDP and debt burden of 82% of GDP demand prudent consolidation via revenue augmentation. Amid collapsing global trade architecture and bloc-based decoupling, India must seize the friend-shoring moment through supply chain integration, FTAs, and industrial competitiveness. However, to truly leverage its demographic dividend and counter declining global productivity, urgent reforms in skilling, labour mobility, and formalisation are imperative. In a world marked by economic fragmentation and policy paralysis, India’s challenge lies not in survival, but in becoming a stabilising fulcrum of growth, resilience, and responsible global leadership.
The report shows the inexorable rise of the ‘silver economy’ warning that while India currently enjoys a youthful demographic profile, it is fast approaching its own aging inflection point, with the working-age population projected to peak by 2048. The report projects that demographic shifts alone could curtail India’s GDP growth by up to 2.8 percentage points by century’s end. However, it also identifies India as a major beneficiary of the ‘healthy aging’ dividend – where improved cognitive and physical capacities in older cohorts could increase labour force participation by 20 percentage points and earnings by 30%. Realising these gains demands robust reforms in preventive healthcare, flexible retirement policies, and gender-inclusive labour force participation, especially critical as India’s female workforce remains underutilised at 23.2%. Without such interventions, India risks squandering its waning demographic dividend and fanning fiscal pressures post-2030. Yet, if it acts swiftly, India could transform impending gerontological headwinds into a new engine of economic dynamism and social resilience.
WEO also explores the global spillovers of migration and refugee policies, highlighting that tighter controls in advanced economies can deflect up to 10% more migrants and refugees to emerging markets like India, modestly boosting output (by 0.2%) but potentially straining local infrastructure and labour markets. For India – home to over 2,00,000 refugees and grappling with high unemployment and porous borders – the report’s emphasis on skill integration and labour market absorption is a clarion call to institutionalise humane, structured refugee frameworks. With 80% of India’s workforce in the informal sector and growing regional instability, unmanaged inflows risk wage suppression and political friction, especially in border states. Simultaneously, India faces outbound migration of 2 million skilled workers annually, necessitating a dual strategy, that of bolstering diaspora leverage through remittance mobilisation ($129.4 billion in 2024) while enhancing domestic integration capacities. The IMF’s call for international policy coordination is particularly pertinent for India, which must assert leadership in regional frameworks like BIMSTEC and the G20 to share fiscal burdens and shape a proactive, rights-based migration agenda.
