Govt must look into these measure to spur demand: IMF chief Gita Gopinath

Mangalore Today News Network

New Delhi, Dec 21, 2019: With Indian economy witnessing a slowdown for close to a year now, the Indian government must work towards spurring private sector demand, IMF’s chief economist Gita Gopinath said recently, CNBC TV-18 reported. The International Monetary Fund is likely to cut India’s GDP outlook further in January as the country reels under sluggish GDP growth. Several factors such as A fall in consumption, lack of private investments and a decline in exports are considered to cause the same. Speaking on how the ongoing slowdown will affect stock market, the India-born economist said that stock market and slowdown are not interconnected as exchanges are forward-looking, Yahoo reported.

 

Meanwhile, Gita Gopinath has also said that while the Narendra Modi-led government has set eyes on taking up the Indian economy to $5 trillion by 2024, the chief economist at IMF said that the goal is extremely challenging. The $5 trillion economy is a good aspiration, but it is extremely challenging to reach, she said at India Economic Conclave. "It would require India to grow in nominal dollar terms at a 10.5% each year for the next five years, and for the last six years, India grew in dollar terms by 6%," she added. The Indian economy is nearing $3 trillion mark as of now but is facing headwinds of the slowdown.

Speaking on the slowdown, Gita Gopinath advised the Indian government to undertake several structural reforms such as bank clean-up and labour reforms with domestic demand going down. She especially emphasised on resolving the issues of the banking sector such as capitalisation, resolution of stressed assets etc. The issue in India is with PSUs (Public sector undertakings), unlike other countries where the problem is with private banks. Also, the country must look into enhancing its infrastructure setup for faster resolution of stressed assets.