International Monetary Fund (IMF) slashed global growth forecasts owing to the economic slowdown in India and other emerging markets, the chief economist of Gita Gopinath said that India was responsible for the depreciation in global growth.
In an interview of Gita Gopinath with an elite news organization at the ongoing 50th annual meeting of the World Economic Forum (WEF) in Davos said Gopinath said, "We have projected global growth at 2.9% for 2019 and 3.3% for 2020 which is 0.1% point lower than the October estimates. The vast majority of it comes from our downgrade for India which was quite significant for both years."
When asked the extent to which the economic slowdown in India had impacted global forecasts, Gita Gopinath said, "Simple calculation says it would be over 80 per cent."
However, India's growth (estimated at 4.8 per cent in 2019) is projected to improve to 5.8 per cent in 2020 and 6.5 per cent in 2021.
Speaking about India's economic recovery, Gita Gopinath added, "We see India recovering. There is a significant recovery coming in in the next fiscal year. There is a fair amount of monetary stimulus in the system, corporate tax cuts are also there -- these should help with recovery in growth."
According to Gopinath, the biggest task before the Modi government is to restimulate growth without furthering the non-performing assets (NPAs) problem.
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"The most major issue to address is the weakness in credit growth. There need to be policies that can resuscitate credit growth but at the same time don't create further NPA problems, that is the first step. There needs to be a quicker recapitalisation of banks," she said.
However, she added that India also needs strong governance reforms.