As Union Finance Minister tours United States and faces the tough task of pulling India from its plunging economic growth, the International Monetary Fund on Thursday said though India has worked on the fundamentals of its economy, there are problems, including the long-term drivers of growth, that need to be addressed.
The IMF on Tuesday trimmed India’s growth forecast by 90 basic points to 6.1 per cent, which is the second downward revision in seven months and in total 120 basis points reduction. 100 basis points is equal to one percentage point.
“India has worked on the fundamentals (of its economy), but there are problems to be addressed. In the financial sector, especially non-banking institutions, there are steps taken now to consolidate banks. They ought to help resolve some of these issues,” IMF Managing Director Kristalina Georgieva told reporters at a news conference in Washington DC
“In India, what is critically important is to continue with addressing the long-term drivers of growth. Investment in human capital in India is a top priority. It has to continue bringing women in the labour force. It is very important. India has very talented women, but they stay at home,” she said.
Kristalina Georgieva said there has been “a very strong growth” in India over the last years and the IMF is projecting reasonably strong growth for the country. However, “like the rest of the world, India is experiencing a slowdown. So slightly over six per cent is what we expect to see in 2019”, she said. “Structural reforms are priority for India. We expect to see those reforms continue,” Kristalina Georgieva said in response to a question.
Chief Economist of the International Monetary Fund (IMF) Gita Gopinath on Tuesday, said it is important for India to keep fiscal deficit in check, even though its revenue projections look optimistic. As against India’s real growth rate of 6.8 per cent in 2018, the IMF in its latest World Economic Outlook, released on Tuesday, projected the country’s growth rate at 6.1 per cent in 2019 and noted that the Indian economy is expected to pick up at 7 per cent in 2020.