The International Monetary Fund (IMF) said India was on a positive growth path vis-a-vis the aftermath of the coronavirus pandemic, and praised the country for its commitment to structural reforms. The IMF in its October outlook projected India to contract by a massive 10.3 per cent in 2020. However, India is likely to bounce back with an impressive 8.8 per cent growth rate in 2021, it had said. IMF chief Kristalina Georgieva praised India for taking "very decisive" steps to deal with the coronavirus pandemic and its economic consequences. Georgieva predicted a less bad outlook for India in the upcoming World Economic Update due to the steps taken by it.
"When I called on everybody to stay tuned for January 26, that applies very much to India. You would see a picture in our update that is less bad. Why? Because the country actually has taken very decisive action, very decisive steps to deal with the pandemic and to deal with the economic consequences of it," Georgieva said.
No just India, the global growth forecasts for 2021 paint a less dire picture than the previous estimates of October, the head of the IMF said, asserting that this year promises to be a consequential year as the world faces an unprecedented race between coronavirus, vaccines and a risk of diverging recoveries.
Cautioning that a difficult period lies ahead, Georgieva said there are also incredible opportunities for structural transformation that needs to be pursued. "It [2021] promises to be a consequential year. We face an unprecedented race between the virus and the vaccines, and a risk of diverging recoveries. We are in a process of updating our 2020 growth estimates and growth forecasts for 2021. They paint a less dire picture than our October forecasts, especially with data from the 3rd quarter surprising on the upside," she said during a global media roundtable.
"We are still faced with tremendous uncertainties about the exit from the health crisis and we do have a difficult period ahead. Inequalities within and across countries are on the rise. We also have incredible opportunities for structural transformation that we need to absolutely pursue," she said.
India's outlook
Talking about India, she said it was a very dramatic lockdown for a country of this size of the population with people clustered so closely together. "Then India moved to more targeted restrictions and lockdowns. What we see is that that transition, combined with policy support, seems to have worked well. Why? Because if you look at mobility indicators, we are almost where we were before COVID in India, meaning that economic activities have been revitalised quite significantly," she said.
"What the government has done on the monetary policy and the fiscal policy side is commendable. It is actually slightly above the average for emerging markets. Emerging markets on average have provided six per cent of the GDP. In India, this is slightly above that. Good for India is that there is still space to do more.. If you can do more, please do," Georgieva said.
"But use it wisely in a more targeted manner and to support an accelerated transformation of the economy. Because what we see is amazing how much faster structural change takes place. And policymakers ought to be leaning forward in this environment to support this structural transformation and to cushion the impact it has on those that are on the losing side of it," she said.
Georgieva said that she is impressed by the appetite for structural reforms that India is retaining.
At the same time, she said that one of the aspects of India's reforms that are still lagging is on gender equality. "I want to just stress it is scary to see how we are losing ground on gender equality over these months so fast. Women are front line workers. They are often in the informal economy, help cannot easily reach them, so they are hit," she said.
-Inputs from agencies