INSUBCONTINENT EXCLUSIVE:
The International Monetary Fund (IMF) will revise estimates for India’s economic growth in January, which will be a significant downward
cut over the previous estimate, its chief economist Gita Gopinath said on Tuesday.
“India is one of the emerging markets where growth has
surprised on the downside,” she said at Times Networks’ India Economic Conclave.
IMF currently projects India to grow at 6.1% in 2019
and 7% in 2020.
“If you look at recent incoming data, we will be revising the numbers and we will come up with numbers in January
It is likely to be a significant downward revision,” Gopinath said, adding that the numbers might be released around January 20.
India’s
economic growth slipped further to hit an over six-year low of 4.5 per cent in the July-September quarter
The previous low was recorded at 4.3 per cent in the January-March period of 2012-13.
The Gross Domestic Product (GDP) growth was registered
at 7 per cent in the corresponding quarter of 2018-19.
“In India, picture looks like one of very weak private demand
It relies quite heavily on government expenditure, while on the other hand, investment has slowed very strikingly and consumption growth,
while still holding up, is slowing,” she said.
She expressed concerns over very slow passthrough of the rate cuts seen in India.
Gopinath
pointed out that the US economy was quite strong at the moment, with record low unemployment
“We in fact project US economy to slow down a bit next year.”
On India’s target to reach $ 5 trillion economy by 2024, she said it was
a good aspiration to have, but mathematically, it was extremely challenging to reach.
“It would require India to grow in nominal dollar
terms at a 10.5 per cent each year for the next five years, and for the last six years, India grew in dollar terms by 6 per cent,” she
pointed.
Gopinath said that the fiscal situation was challenging right now, referring to the recent corporate tax cuts.
Pointed out that
problems were very much in the financial system, she said, “I think it’s a good idea to clean up the system, but what is required is
I think there is certainly more that can be done.”
The chief economist of IMF viewed Goods - Services Tax (GST) as a very good reform
“It is a very welcome development
But there is more to be done to improve its effectiveness.”
Gopinath also expressed concerns over low productivity in Indian
agriculture.
Emphasising that it was very important for India to stay on the path of fiscal consolidation, she hoped that the government
should be able to push through strong structural reforms such as land and labour given the majority in Parliament.
