The International Monetary Fund (IMF) on Tuesday lauded India's efforts in managing economy well with "good measures", amid persisting global uncertainties.
IMF Managing Director Christine Lagarde, who is on a two-day visit to India, also said the multilateral agency is keen on implementing quota reforms that would provide more voting rights for emerging nations including India and China.
Appreciating India's economic reforms measures, she said: "The decision of government to cap subsidies at 2 per cent of GDP, I think that is a very solid anchoring of the role of subsidies."
"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 2 per cent. All of those measures are good measures," Lagarde, who is visiting India for the first time after becoming the IMF chief, said.
The IMF chief described India's expected growth rate of 7 per cent next year as "significant" while reminding that vulnerabilities and fragile zones continue to remain in the global economic landscape.
"Change is in the air", she said while stressing that India and China are the leading members of the IMF.
On the global economic situation, she said: "The situation is not as grave as it was three months ago ... (The global economy) is further away from the abyss."
However, she cautioned that supply disruptions from Iran could push global crude prices by up to 30 per cent, at a time when the price is hovering at $125 a barrel.
"If there was for instance a major shortage of export of oil from Iran, it will certainly drive prices up, at least for a period of time. We believe that it will be in the range of 20-30 per cent," Lagarde said.
"As I just mentioned the sudden and brutal rise in the price would have serious consequences on the global economy at large and will impact particularly the oil importing countries and amongst them low income countries," she said.
Crude oil prices have surged to $125 a barrel on concerns over Middle East supplies as well as on signs of stabilisation in the world economy.
Oil price shock would have its implication on the global economy including India, she said. India heavily depends on import for its crude oil requirement. The country imports 110-120 million tonnes of oil every year.
Lagarde also said that the global financial crisis has presented many lessons.
"We learnt that there is a very strong inter-connection between economies and everybody has been affected by the crisis. We also understood that financial sector and financial institutions were high contagious agents during the crisis," she pointed out.
IMF has been playing a key role in stabilising the world economy, especially in providing financial assistance for the debt-laden Greece - the epicentre of European debt crisis.
The IMF board has recently approved loan worth 28 billion euros to Greece.