NEW DELHI: India has been advised by the International Monetary Fund (IMF) to go in for further monetary policy easing and structural reforms at a broader level to reverse the cyclical demand slowdown. The call came on Tuesday, while the IMF also slashed down its growth projection for the country to 6.1 per cent for the current fiscal, which is lower from its July forecast of 7 per cent.
The principal global financial agency acknowledged that the global economy is in a synchronized slowdown and that it is downgrading global growth for 2019 to 3 per cent.
“The Indian government has taken appropriate steps but it needs to do a lot more, including cleaning up the balance sheets of commercial banks, to ward off the negative impact on growth from financial vulnerabilities. On the fiscal side, there have been some recent measures like the corporate tax cut,” IMF chief economist, Gita Gopinath, told the media.
“There has been no announcement on how that will be offset through revenues at this point. So, the revenue projections going forward look optimistic. But it is important for India to keep the fiscal deficit in check,” the IMF chief economist, who had her college education in Delhi, said.
Gopinath said the global economy is in a synchronized slowdown and that IMF is downgrading growth for 2019 to 3 per cent, the slowest pace since the 2008 financial crisis. “Growth continues to be weakened by rising trade barriers and increasing geopolitical tensions. We estimate that the US-China trade tensions will cumulatively reduce the level of global GDP by 0.8 per cent by 2020. Growth is also being weighed down by country-specific factors in several emerging market economies, and structural forces such as low productivity growth and ageing demographics in advanced economies,” she said. –Agencies, IHN-NN
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