Congress leader and former Finance Minister P Chidambaram on Tuesday warned the International Monetary Fund and its chief economist Gita Gopinath of attacks by government ministers, a day after the agency slashed India’s growth forecast.
On Monday, the IMF had lowered India’s economic growth estimate for the 2019-’20 financial year to 4.8%. In October, it had predicted an expansion of 6.1% in 2019-’20. India’s “domestic demand has slowed more sharply than expected amid stress in the non-bank financial sector and a decline in credit growth”, the IMF said on Monday. It said global growth would reach 3.3% in 2020, compared to 2.9% in 2019 – which was the slowest pace since the financial crisis a decade ago. The estimates for both years were cut by 0.1% from forecasts made in October because the slowdown in India was sharper than expected.
“IMF Chief Economist Gita Gopinath was one of the first to denounce demonetisation,” Chidambaram said in a series of tweets on Tuesday morning. “I suppose we must prepare ourselves for an attack by government ministers on the IMF and Dr Gita Gopinath.” He said the revised growth numbers were a “reality check” from the monetary fund. “Even the 4.8% is after some window dressing,” he added. “I will not be surprised if it goes even lower.”
Gopinath had also said that there was stress in non-banking financial corporations. She added that credit growth, business sentiment and the growth of rural incomes were weak.
The Indian economy grew 4.5% in the July-September 2019 quarter, the slowest in six years. The economy has been affected by weak consumption and job cuts. Last week, the government predicted 5% Gross Domestic Product growth rate for 2019-’20 – the lowest in 11 years.
Chidambaram has attacked the Modi government over the economic slowdown earlier also. After government data showed that wholesale inflation rose to 2.59% in December 2019, Chidambaram had said that if unemployment rises and incomes decline, there is danger of youth and students “exploding in anger”. He asked whether this is the “achhe din [good days]” promised by the ruling party.