The International Monetary Fund has issued a statement on the Union Budget recommending more structural reforms in the finance sector. It has said that India’s financial sector urgently needs reform measures that are more ambitious and that the country needs a medium-term fiscal consolidation strategy due to the rising debt levels.
In the latest statement from IMF, it has been stated that “there is a weaker economic environment in India”. Speaking to reporters, Gerry Rice, a spokesperson for IMF, there remains an urgent need for more ambitious structural and financial sector reform measures and a medium-term fiscal consolidation strategy, anchored in tangible revenue and expenditure measures, especially given rising debt levels.
He further added that the environment is weaker than anticipated earlier, which calls for a more accumulative fiscal stance in the budget.
The IMF in January lowered India’s economic growth estimate for the current fiscal to 4.8%. For the same period last year, it had predicted 7.5% growth. In October 2019, it has lowered India’s growth to 6.1%.
IMF's World Economic Outlook (WEO) blamed India's economic slowdown for a "lion's share" of the 0.1% cut in the global economic growth projections for last year to 2.9% and to 3.3% for the current year from those made in October.
IMF’s Chief Economist Gita Gopinath too, had said that the extent of the slowdown of the Indian economy has surprised many, including the IMF.
"Growth slowed further to a six-year low of 4.5 per cent (year-on-year) in the second quarter of FY2019-20 (July-September 2019), from 5 percent (year-on-year) in the previous quarter. A sharp moderation of investment, slowing consumption growth, and an inventory rundown contributed to the slowdown," she said at the time.