It is important for India to keep fiscal deficit in check, even though its revenue projections look optimistic, Chief Economist of the International Monetary Fund (IMF) Gita Gopinath has said.
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 for 2019 and noted that the Indian economy is expected to pick up at 7 per cent in 2020.
In India’s case, there has been a negative impact on growth that has come from financial vulnerabilities and the non-bank financial sector, and the impact on consumer borrowing and borrowing of small and medium enterprises, Gopinath said.
The Indian-American economist was speaking to reporters ahead of the annual meeting of the IMF and the World Bank.
On the projections in the World Economic Outlook report, Gopinath said appropriate steps have been taken.
Appreciative of the recent steps being taken by Finance Minister Nirmala Sitharaman to address the economic challenges being faced by India, she said there is still a lot more that needs to be done.
Prominent among these include cleaning up of balance sheets of regular commercial banks, Gopinath said.
“In our projections we have that India will recover to 7 per cent growth in 2020. And the premise is that these particular bottlenecks will clear up,” she said.
On the fiscal side for India, there have been some recent measures, including the corporate tax cut. There has not been an announcement about how that will be offset to revenues at this point, Gopinath said.