Economy in crisis: IMF may downgrade India’s growth forecast, says chief economist Gita Gopinath

Even as it’s facing stiff resistance from university students and other groups over the implementation of the discriminatory Citizenship (Amendment) Act (CAA), the Modi government received another thumbs down, with the International Monetary Fund (IMF) on Tuesday expressing doubts over PM Narendra Modi’s much-touted claim of making India a $5 trillion economy by 2025. The IMF is also set to downgrade India growth forecast.

Gita Gopinath, the India-born chief economist with the IMF, said that in view of the recent incoming data, it is doubtful that the IMF would be revising the country’s growth estimate in January 2020.

“IMF is set to cut the growth estimate for India significantly,” she said while speaking at an event organised by a private news channel in Mumbai.

According to analysts, fall in consumption, lack of private investment and sluggish exports are responsible for a slower GDP growth which slid to a six-year low of 4.5 per cent in September.

Apart from IMF, the RBI and other economy watchers have already done downward reviews of their growth forecast for India for the Financial Year 2019-2020.

Gopinath said India is the only emerging market which has thrown a surprise of this kind.

“If you look at recent incoming data, we would be revising our numbers and come up with numbers in January, and it is likely to be a significant downward revision for India,” she said.

The 38-year-old economist said India will have to grow at 10.5 per cent in nominal terms as against 6 per cent in the last six years, and 8-9 per cent in real terms in order to achieve the $5 trillion economy target by 2025.

Pointing out systematic failure and policy paralysis in the Modi regime, Gopinath suggested India’s problems are in the financial sector and the policymakers should address the same at the earliest.