The International Monetary Fund, 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 after India registered real growth rate of 6.8 per cent in 2018. In India's case, there has been a negative impact on growth that has come from financial vulnerabilities and the nonbank financial sector, and the impact on consumer borrowing and borrowing of small and medium enterprises, Chief Economist of the International Monetary Fund (IMF) Gita Gopinath has said. It is important for India to keep fiscal deficit in check, even though its revenue projections look optimistic, she added.
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. On the projections in the World Economic Outlook report, Gopinath said appropriate steps have been taken. 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.
"It looks optimistic, the revenue projections going forward. But it is important for India to keep the fiscal deficit in check," she said. The prominent Indian-American economist said the overall growth remains very strong in India by the standards of the world economy. Even though it's lower than the very high standards at which the world was accustomed to looking at India, he said.
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