International Monetary Fund Managing Director Kristalina Georgieva on Friday said the current slowdown in the Indian economy cannot be described as a recession. “’re far from that [recession],” she told journalists in Washington, reported PTI. “But it is a significant slowdown, not the recession.”

Just a day before the Union Budget, Georgieva said the country witnessed an abrupt slowdown in 2019 due to measures like demonetisation and Goods and Service Tax. “It appears that the main reason for this slowdown was the non-banking financial institutions experiencing turbulence,” Georgieva said. “For example, coming with the unified tax system [GST], and the demonetisation that took place. These are steps that over time are beneficial, but of course, they might be somewhat disruptive over the short term.”

Georgieva said the economy is expected to return to an upward trajectory in 2020 and 2021. “We had to revise the growth projections for India downwards to 4% for this reason [slowdown],” she added. “We are expecting 5.8% [growth rate] in 2020 and then an upward trajectory to 6.5% in 2021.”

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 month, the government predicted 5% Gross Domestic Product growth rate for 2019-’20 – which would be the lowest in 11 years.

The IMF managing director said poor consumption contributed to the overall slowdown in the Indian economy. Ahead of the Budget, she said the monetary fund would keep an eye on what India does to get “relatively sound macroeconomic fundamentals to pay off in terms of better growth trajectory”. Georgieva added that India needs to increase budgetary revenue collection. “I said it’s tight on the spending side, but I also want to stress that there is room to improve collection on the revenue side,” she said.

Finance Minister Nirmala Sitharaman will present the Union Budget for 2020-’21 in the Lok Sabha at 11 am on Saturday. The Budget comes amid a rapid economic slowdown, rising unemployment, widening fiscal deficit and an increase in retail inflation.

A day before the Budget, Sitharaman tabled the Economic Survey for 2020-’21 in the Parliament on Friday afternoon. The survey predicted that Gross Domestic Product will grow between 6% and 6.5% during the next financial year, as opposed to an estimated 5% in 2019-’20. It also projected industrial growth at 2.5% but added that there was a chance of a widening of the fiscal deficit.