IMF calls for 'urgent' action to reverse economic slowdown in India

The International Monetary Fund (IMF) said on Monday that India is in the midst of a significant economic slowdown. IMF has urged the government to take urgent measures to address the situation. The economy that has been one of the engines of global growth and the key to lifting millions out of the poverty is now in a significant slowdown, asserted the IMF. Declining consumption and investment, and falling tax revenue, have combined with other factors to put the brakes on one of the world's fastest-growing large economies, the IMF said in its annual review of India's economy.

READ | Equities Deepen Losses As Worries Over Economy Resurface

'Urgent policy measures required'

The IMF Directors noted in its report released on Monday that India's rapid economic expansion in recent years has lifted millions of people out of poverty. However, in the first half of 2019, a combination of factors led to subdued economic growth in India. Addressing the current downturn and returning India to a high growth path requires urgent policy actions," said Ranil Salgado of the IMF Asia and Pacific Department.

READ | Not All Is Gloomy! SBI Chairman Nudges Industry To Borrow And Invest In Economy

IMF chief economist Gita Gopinath last week said India’s slowdown had “surprised to the downside,” and said the fund is set to significantly downgrade its growth estimates for the Indian economy in the World Economic Outlook which will be released next month.

READ | Industry Captains Discuss Road Map For USD 5 Trn Economy

Gopinath had met Prime Minister Narendra Modi in this regard on Monday and also discussed policy measures required to make a reversal. Earlier, Gita Gopinath had reflected upon the drop in the GDP growth rate of India and advised that the policy priorities of the government should include a credible fiscal consolidation path that is more ambitious than currently envisaged by the government. She added that this was needed to reduce the high level of debt and crowding out which would free up financial resources for private investment while it should also be driven by subsidy-spending rationalization. While responding to a question on PM Modi's vision of $5 trillion economies, Gopinath termed the vision as 'appropriate' and also hailed the country's commitment to the rural economy, boost infrastructure spending, streamline the Goods and Services Tax (GST).

READ | IMF Economic Councellor Gita Gopinath Meets PM Narendra Modi