WASHINGTON: The Indian economy experienced an abrupt slowdown in 2019 due to turbulence in non-bank financial institutions and major reform measures such as GST and, but not in recession, IMF Managing Director has said.
The Indian economy has in fact experienced an abrupt slowdown in 2019. We had to review our growth projections, down to four percent for last year. We expect 5.8 percent (growth rate) in 2020 and then an upward trajectory to 6.5 percent in 2021, Georgieva told a group of foreign journalists here on Friday.
It seems that the main reason for this slowdown was that non-bank financial institutions experienced turbulence, he said on the eve of the Union's finance minister presenting the annual budget in Parliament on Saturday.
He said that India had undertaken some important reforms that would be beneficial for the country in the long term, but have a short-term impact.
Live plus For example, come with the unified tax system and demonetization that took place. These are steps that are beneficial over time, but of course they could be somewhat harmful in the short term, Georgieva said in response to a question.
the International Monetary Fund ( IMF ) Managing Director said that there is not a lot of fiscal space in India. "But we also recognise that the policies of the government on that side, on the fiscal side have been prudent. We will see how the reading of the budget, the submission of the budget goes, tomorrow," she said.
In the medium-term, she said, the IMF remains optimistic about India. "This is why we see that upswing potential for the growth in the country," she said.
Georgieva said the current economic slowdown cannot be described as a recession. No ... you are far from that. But it is a significant slowdown, not the recession, he said.
the IMF managing Director noted that the consumption in India also slowed down and that contributed to the overall slowdown in the economy. the IMF would be keen to see what India does to get relatively sound macroeconomic fundamentals to pay off in terms of better growth trajectory, she said ahead of the budget.
One thing that is important for India is that budgetary revenue have been below target. " the country knows that. the finance minister knows it. They need to increase budgetary revenue collection so they can improve their fiscal position. I said it's tight on the spending side, but I also want to stress that there is room to improve collection on the revenue side," she said.