Public investment is “absolutely important” for India as it will drive the country’s growth over the next few years, International Monetary Fund Chief Economist Gita Gopinath told CNBC-TV18 on Wednesday.
“Public infrastructure investment is one of the biggest priorities for India,” Gopinath said in an interview to the news channel. She told CNBC-TV18 that this includes education, health and social safety.
The IMF chief economist added: “The potential that is there in terms of private sector investment of consumption-linked growth, I would say that the forces there are somewhat weaker than we would like. And so, public investment can certainly be one of the drivers of growth in the next few years.”
Gopinath told CNBC-TV18 that service and manufacturing sectors in India were recovering. “It is an incomplete recovery, but a recovery nevertheless as listed firms in India were doing better than expected,” she added.
However, inflation is a concern in India, Gopinath told NDTV. She said that India should keep an eye on the coal sector, higher oil prices and inflation, which are key areas.
The IMF chief economist added that India will have to maintain its pace of Covid-19 vaccinations.
“It is highly commendable that with such a large population, 50% of the population [of India] has at least one dose,” Gopinath told NDTV. “That is a source of confidence that the recovery will continue. “But, I would say, that the risk that there will be a third wave still remains.”
In its World Economic Outlook report on Tuesday, the International Monetary Fund predicted that India’s economy was expected to grow by 9.5% in 2021 and 8.5% in 2022.
The International Monetary Fund’s projections about India remain the same as those made in its previous report released in July. In April, however, the global financial institution had predicted that India’s economy will grow by 12.5% in 2021 and 6.9% in 2022.
India’s Gross Domestic Product had contracted by 7.3% in the financial year 2020-’21.