[ad_1]
The first female chief economist of the International Monetary Fund, Gita Gopinath, spoke today about the risks badociated with India's "high" budget deficit, while refusing to comment on specific government policies.
The overall consolidated budget deficit remains high and has been the case for five years, "Gopinath said on the sidelines of the World Economic Forum in Davos, Switzerland. "We must definitely solve this problem."
The comments of the US-Indian economist come when the administration of Prime Minister Narendra Modi would arrange a cash payment to struggling farmers in the country. Bloomberg announced today that the plan to give money to farmers instead of subsidies would have an additional cost of about 70 trillion rupees per year for the state treasury.
However, India has already exceeded its budget deficit target. This means that the government will have a very limited fiscal margin to increase spending in an election year.
Part of India's risk of fiscal slippage stems from continued weakness in the collection of the goods and services tax, Gopinath said. "GST revenues are not reaching the expected rate and this would be an area where continuous improvement would be needed." Global growth is expected to slow to 3.5% in 2019 from 3.7% last year. "We have reduced the forecast in 2019. But it is important to note that the revisions are modest," she said.
"What concerns us more is the growing risks to the global economy," said Gopinath. "And several of them: an acceleration of trade tensions, a deterioration in financial conditions, a Brexit without agreement and, in the event of a slower than expected slowdown in China, this would have far more negative consequences for the global economy, what we have right now. "
Yet, India is about to stay isolated from them. expects India to remain the leading economy with the strongest growth over the next two years, thanks to lower oil prices and slower monetary policy tightening.
Look at interview here:
Source link
