New Delhi: The overall headline numbers of India’s economy are strong, reflecting a large amount of public investment which has been a critical factor driving growth, according to IMF Deputy Managing Director Gita Gopinath.
She said India must carry out further reforms to maintain its growth trajectory and ensure sufficient job creation.
Gita Gopinath, who expects the Indian economy to become the third largest in the world by 2027, said, “What is important is to ensure that all of that growth is accompanied by sufficient job creation in the economy so that there is widespread sharing.
Addressing an event at her alma mater, the Delhi School of Economics, she said, “From a long-term perspective there is no trade-off between fiscal consolidation and growth. If a country does not have sufficient checks and balances on its fiscal situation, it is likely to end up in a crisis. Therefore, there is a reason why governments should engage in fiscal consolidation. Now, there is, of course, a question in the near term by design, reducing your fiscal deficit in the short term could have a negative effect. However, there are ways to do it that do not have a significant negative impact.”
Her remarks came as a reaffirmation of Finance Minister Nirmala Sitharaman cutting the fiscal deficit at 4.9 per cent of GDP in the Budget for 2024-25 to stick to the fiscal consolidation path aimed at ensuring a stable growth path for the economy as a lower deficit helps to keep inflation in check. It will also reduce the borrowing required by the government which will leave more money in the banking system for companies to borrow for investments to spur growth and create more jobs.
Gita Gopinath also came out strongly in favour of more women coming into leadership positions and exhorted them to use their inner strength to rise to the top.
“First and foremost, it’s my appeal to these wonderful women that we need more women in leadership positions in the world. Certainly, progress has been made. At one point, it was unthinkable that the managing director of the IMF would be a woman but we now have a current managing director who is a woman, and the previous managing director was also a woman. So, things have changed. However, it absolutely critical that we see more women in leadership positions. For that, you will need to rely more on your inner strength than men have to,” Gopinath said.
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