India’s economic growth rate needs to be faster: IMF
International Monetary Funda (IMF) projected India’s growth of 12.5 for fiscal year 2021-2022.
In an Interview to PTI on Friday, Deputy Chief Economist, Petya Koeva Brooks of The International Monetary Fund (IMF) made a strong case for an additional economic stimulus to address the impact of the pandemic on the India’s economy.
She talked about recent lockdown and emergencies created due to rapid surge in Covid-19 cases in India.
She also talked about the trajectory growth in India and added, “If you look at a concept of scarring, which just compares what the level of output would have been in 2024, if there will not been a crisis.
IMF Deputy Chief Economist further said, “We are very glad to see the strong rebound this year with projected growth of 12.5 for fiscal year 2021-2022 and we are also seeing high frequency indicators including PMI (Purchasing Managers’ Index), and trade and more mobility indicators which give us a sense that there is continued recovery in the first quarter of this year,” as quoted by PTI.
Brooks then talked about coordinated policy response and added, “What makes sense is to maintain the focus on having that coordinated policy response because this is what’s going to prevent the long-term damage to the economy. Providing that support to small and medium-sized firms as well as vulnerable houses would be particularly important.”
Brooks made strong statement on the additional economic stimulus– “We do think that additional fiscal stimulus would be helpful. Focusing that stimulus again on the most vulnerable is something that makes sense to us. We note that some of the income support schemes were not extended beyond November 2020.”
She also ensured that there is a very concrete medium-term fiscal framework is an area where we can see some room for more work in that area. She further talks about economy, maintaining the accommodative monetary policy stance.
Brooks further told that IMF is very supportive to India’s recent takes to make India self sufficient. Brooks said the IMF very much welcomes the measures that were announced by India during its budget. It is particularly supportive of maintaining the accommodative fiscal stance and also emphasising expenditures on health and infrastructure.
While, another Senior IMF official said, “India, which is projected to grow at an impressive rate of 12.5 per cent this year, needs to grow at a much faster pace to make up for the unprecedented contraction of eight per cent that it clocked during the COVID-19 pandemic in 2020.”
IMF official further added, “This has been our long-standing recommendation that we see scope for additional policy measures to address the weaknesses in the financial sector, in the banking part in the non-bank part of the financial sector. We think that this is going to be particularly important as we come out of the crisis to have that efficient credit intermediation, which is going to allow the economy to grow.”