IMF says India in midst of significant economic slowdown, calls for urgent policy actions
NEW DELHI: India is in the midst of a significant economic slowdown, the International Monetary Fund (IMF) has said, asking for urgent steps to reverse slowdown while continuing with credible fiscal consolidation.
The fund released Article IV consultation report on India in Washington on Monday.
"India is now in the midst of a significant economic slowdown…. Addressing the current downturn and returning India to a high growth path requires urgent policy actions,” Ranil Salgado of the IMF Asia and Pacific Department told reporters.
India’s economic growth slumped to a six-year low of 4.5% in July-September quarter and many experts now expect full FY20 growth at below 5%.
印度经济增速在7 - 9月跌至4.5%的6年低点，许多专家预计2020财年的增速将低于5%。
The report presented two scenarios with the second one pushing for significant reforms around three pillars to boost growth-—Firstly, ongoing clean-up of bank balance sheets should be complemented by a decisive strengthening of PSB governance and regulation and oversight of NBFCs, it said. Secondly, a medium-term fiscal consolidation path should be anchored by the Fiscal Responsibility and Budget Management Review Committee’s recommendation to reduce general go nment debt toward 60% of GDP and thirdly, unveil labour, land and productivity reforms. The other scenario pointed ANIRBAN BORA that the country could grow by 7.3% in medium term riding on the back of reforms already taken such as Goods and Services Tax. It backed continuation of monetary easing, but cautioned against fiscal stimulus to boost growth.
Growth is projected at 6.1% in 2019-20, IMF said, while adding that risks are to the downside. IMF’s chief economist Gita Gopinath had last week said that India’s growth forecast is likely to revised down “significantly” in the upcoming January review.
Credible medium-term fiscal consolidation path driven by subsidy-spending rationalisation and tax base-enhancing measures are needed to reduce debt, free up financial resources for private investment, and reduce the interest bill, the IMF said. It cautioned that the go nment has limited space to boost spending to support growth, especially given high debt levels and interest payments.
India's rapid economic expansion in recent years has lifted millions of people out of poverty. However, in the first half of 2019, a combination of factors led to subdued economic growth in India.
The IMF in October slashed its forecast for 2019 by nearly a full point to 6.1%, while cutting the outlook for 2020 to 7.0%.