The International Monetary fund (IMF) has come out and supported India’s decision to impose a nationwide lockdown to curb the spread of the novel coronavirus despite the economic price and termed it as ‘very wise.’
Changyong Rhee, the director of Asia and Pacific Department, addressed a press conference on Wednesday and acknowledged that India had entered the COVID-19 pandemic amidst a credit crunch slowdown. He said that the recovery now becomes more uncertain. Earlier, the IMF drastically reduced India’s growth projection to 1.9 percent from the previous projection of 5.8 percent in January which was lower than the prediction in October which was 7 percent.
Changyond Rhee also pointed out that India’s drastic measure to lock the entire nation down can cause a steep drop in the economic activity and also the growth rate but also applauded it as the wise thing to do in minimizing the long term impact.
According to Rhee, although the fiscal stimulus and the monetary policy adopted by the Reserve Bank and the Indian government is in the right direction, it depends on how successful the containment policy will work in handling the crisis. He also hoped that India’s efforts will be successful. Rhee also pointed out that if the situation worsens, India will have no choice but to use more fiscal and monetary policies to contain the slowdown of the economy.
India to be fastest growing economy this year
Talking about the measures that need to be taken post the COVID-19 crisis, Rhee suggests that India should restructure its reforms and move in a direction of more inclusive growth by prioritizing infrastructure. In an alarming admission, Rhee said that for the first time in 60 years, the Asian region will see a zero percent growth this year.
In the estimation of IMF, India with its growth rate of 1.9 percent this year would be the fastest-growing major economy of the world followed by China with 1.2. IMF also predicts the economy to shrink by 3 percent and the growth to go below zero. The economy of the United States is estimated to shrink by 5.9 percent and the European area to be decreased by 7.5 percent.
However, the IMF also expects India to bounce back with a growth rate of 7.4 percent in the next fiscal year that is more than the 6.5 percent projected in January.
Source: Times of India