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September 22, 2020

Government is in majority, must strengthen lethargic Economy: IMF

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  • International Monetary Fund said – there will be a big cut in GDP growth estimate, releases in January
  • ‘The government is in the majority, so it should speed the process of reforms up for sustainable development’
  • The country’s GDP growth was just 4.5% in the September quarter, its lowest in 6 years

The International Monetary Fund (IMF) has said that the Indian economy is in a state of lethargy. The government needs to take policy steps immediately. In a report released on Monday, the IMF said that millions of people came out of poverty because of speeding up India’s economic growth in the last few years. However, economic growth was weak in the first half of this year because of some reason. Describing the risk of reducing India’s outlook, the IMF said that continued strengthening in macroeconomic management is necessary. The new government is in the majority. Therefore, there is a chance they should speed the process of reforms speeded up for joint and sustainable development.

Signs of weak economic activity in the December quarter: IMF

The country’s GDP growth declined to 4.5% in the September quarter. This is the lowest in the past 6 years. Ranil Salgado, Mission Chief for India of the IMF Asia and Pacific Department, says growth figures show that private domestic demand grew by just 1% in the September quarter. There are signs that economic activity has been weak even in the December quarter.

According to Salgado, private consumption was affected due to the cash crunch of non-banking financial companies, tightening lending rules and lower-income in rural areas. It may also play a role in the implementation of some important and appropriate reforms like GST. According to Salgado, the IMF’s GDP growth estimate released in January will be much lower than the previous estimate. Let me tell you that in October also, the annual GDP growth estimate of the country was reduced by 0.9% to 6.1%.

Salgado said that India performed well on other fronts. Foreign exchange reserves are at record levels. The fiscal deficit has reduced. There has been some increase in the inflation rate now, but it has remained under control in the last few years. Salgado says India’s economic slowdown is shocking for the IMF, but cannot call it an economic crisis.

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