India’s government must immediately react and take steps quickly to reverse the ongoing economic slowdown, said the International Monetary Fund.
Dilapidated consumption and investment, and declining tax revenue, have united with other factors in hindering one of the fastest growing economies in the world, the IMF said in its annual review.
Earlier, Gita Gopinath, IMF chief economist said that India’s slowdown had “surprised to the downside,” and the fund is set to drastically lower its growth estimates for the Indian economy in the World Economic Outlook which will be unveiled next month.
The IMF in October reduced its forecast for 2019 pertaining to India by nearly a full point to 6.1 percent, while cutting the outlook for 2020 to 7.0 percent.
Banking regulator, the Reserve Bank of India (RBI) had cut the key lending rate five times this year presenting a nine-year low performance, but at its last meeting earlier this month surprised the market by keeping policy unchanged.
The central bank has lowered its annual growth forecast to 5 percent from 6.1 percent, as consumer demand and manufacturing activity shrinks.
Showing the lowest growth pace of the last six years in the July-September period, India’s economy grew down to 4.5 percent from 7.0 percent a year ago, according to government data.
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