She said India had undertaken some important reforms that over the longer term would be beneficial for the country, but they do have some short-term impact.
Kristalina Georgieva
"It appears that the main reason for this slowdown was the non-banking financial institutions experiencing turbulence," she said on the eve of Union Finance Minister Nirmala Sitharaman presenting the annual budget in Parliament on Saturday.
She said India had undertaken some important reforms that over the longer term would be beneficial for the country, but they do have some short-term impact. "For example, coming with the unified tax system, and the demonetisation that took place. These are steps that over time are beneficial, but of course they might, might be somewhat disruptive over the short term," Georgieva said in response to a question.
The International Monetary Fund (IMF) Managing Director said that there is not a lot of fiscal space in India. "But we also recognise that the policies of the government on that side, on the fiscal side, have been prudent. We will see how the reading of the budget, the submission of the budget goes, tomorrow," she said.
In the medium-term, she said, the IMF remains optimistic about India. "This is why we see that upswing potential for the growth in the country," she said. Georgieva said that the current economic slowdown cannot be described as a recession. "No... You're far from that. But it is a significant slowdown, not the recession," she said.
The IMF managing Director noted that the consumption in India also slowed down and that contributed to the overall slowdown in the economy. The IMF would be keen to see what India does to get relatively sound macroeconomic fundamentals to pay off in terms of better growth trajectory, she said ahead of the budget.
One thing that is important for India is that budgetary revenue have been below target. "The country knows that. The finance minister knows it. They need to increase budgetary revenue collection so they can improve their fiscal position. 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.
Catch up on all the latest Crime, National, International and Hatke news here. Also, download the new mid-day Android and iOS apps to get latest updates
Subscribe today by clicking the link and stay updated with the latest news!" Click here!
