New Delhi: Appreciating India's economic reform measures, IMF chief Christine Lagarde on Tuesday said the government's decision to cap subsidies at two percent of GDP is a good step forward.
    
"The decision of government to cap subsidies at two percent of GDP, I think that is a very solid anchoring of the role of subsidies," Lagarde, who is on her first India visit as IMF Managing Director, told reporters here.
    
In the 2012-13 Union Budget presented last week, Finance Minister Pranab Mukherjee had said that subsidies would be capped at two percent of GDP.
    
"We are encouraged to see there is a continued path towards fiscal consolidation. That there is a determination to improve the tax code. There is a determination to cap the subsidies at two percent. All of those measures are good measures," Lagarde said.
    
On a two-day visit to India, the International Monetary Fund (IMF) chief met Mukherjee and Commerce and Industry Minister Anand Sharma yesterday.
    
According to her, it was pleasing to see that there would be continued interest in encouraging capital investment to address bottlenecks in infrastructure, especially in power sector.
    
"We are keen to see FDI investment to surge in India and to that end, a favourable business climate will be helpful in going forward," Lagarde noted.
    
IMF expects Indian economy to expand about 7 percent next year, which Lagarde described as a significant growth number.
    
"In India, the fact that there will be support for capital investment, there will be an effort towards developing infrastructure in our view is critical to unleash the potential for growth this country has," the IMF chief said.
    
She also appreciated the Unique Identification Authority of India (UIDAI) initiative.

(Agencies)