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Budget 2022: IMF’s Gita Gopinath Expects India To Address Unequal Recovery, Focus On Healthcare, Education
Budget 2022: IMF’s Gita Gopinath expects India to continue the infrastructure investment along with the asset monetisation programme.
Budget 2022 Latest News Today: As the Central government is preparing to present the Budget 2022 in just a few days, Gita Gopinath, deputy managing director of IMF, on Wednesday said India should address the unequal recovery in the country through the Budget by adequately funding the rural employment guarantee scheme and ensuring free food ration beyond March. It must be noted that the Centre has extended the free food scheme, Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) till March 2022.
In an interview to BloombergQuint, Gopinath said she also expects the Central government to focus more on healthcare spending and increase education expenditure. Apart from this, she also expects India to continue the infrastructure investment along with the asset monetisation programme.
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Giving more details, Gopinath said India should communicate a credible medium-term target for fiscal deficit that will help in keeping the financing costs down at this time when the interest rates are set to increase in advanced economies like the US.
On Tuesday, the IMF has cut India’s economic growth forecast by 0.5 percentage points to 9 per cent for the current fiscal year, with its Chief Economist Gita Gopinath saying that the slight downgrade is mainly due to the impact of the spread of the Omicron variant.
“If you look at the 2021-22 fiscal year, we have a slight downgrade of -0.5 percentage points and for the next fiscal year 2022-23 we have a slight upgrade of 0.5 percentage points. So, growth for the previous fiscal year is now nine per cent and for this year now is at nine per cent. We moved it up slightly,” Gopinath said.
In its latest update of World Economic Outlook on Tuesday, the International Monetary Fund has cut India’s economic growth forecast to 9 per cent for the current fiscal year ending March 31, joining a host of agencies which have downgraded their projections on concerns over the impact of the spread of Omicron on business activity and mobility.
The Washington-based international financial institution, which had in October last year projected a 9.5 per cent GDP growth for India, put the forecast for the next fiscal FY23 (April 2022 to March 2023) at 7.1 per cent. The Indian economy had contracted by 7.3 per cent in the 2020-21 fiscal year.
Responding to a question, Gopinath explained that the main reason for the downgrade for the 2021-22 fiscal comes from Omicron. Because of this variant of the coronavirus in the first quarter of this year, there have been some localised lockdowns and restrictions in activity and mobility, she noted.
“That has an impact on the growth numbers which is why we have a slight downgrade and that postponement of the recovery is what’s feeding into a slight upgrade for the following year, Gopinath said.
According to the IMF, India’s prospects for 2023 are marked up on expected improvements to credit growth and, subsequently, investment and consumption, building on better-than-anticipated performance of the financial sector.