The International Monetary Fund on Thursday said that the Indian economy urgently needed more ambitious structural and financial sector reforms, PTI reported. The monetary fund had in January said the Indian economy is projected to grow 4.8% in 2019-’20. In October, it had predicted an expansion of 6.1%.
Responding to a question about the Union Budget presented by Finance Minister Nirmala Sitharaman, the Washington-based organisation’s spokesperson Gerry Rice said the economic environment in the country was weaker than what they had forecast earlier. “While the Budget touches on ongoing sectoral efforts, 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 added.
Rice said there was also an urgent need for medium-term fiscal consolidation strategy because of the rising debt levels, while ensuring a more accommodative fiscal stance in the Budget.
The Indian economy grew just 4.5% in the second quarter of the 2019-’20 financial year, the slowest in six years. The government has forecast an annual growth rate of just 5% for the current financial year, the slowest in 11 years. In the last few months, core sectors such as automobiles and manufacturing have progressively slowed down because of weakened consumer demand and dearth of investments.
Data released on Wednesday showed that retail inflation rose to 7.59% in January from 7.35% the month before. The industrial output also contracted 0.3% in December 2019, compared to the same month in 2018, because of decline in the manufacturing sector.