İrem UZUN -TDO- India is now in the midst of a significant economic slowdown, the International Monetary Fund has said, urging the government to take urgent policy actions to address the current prolonged downturn. In its report released Monday, the IMF Directors noted that India's rapid economic expansion in recent years has lifted millions of people out of poverty.
"The issue in India currently is the growth slowdown. We still believe it is mostly cyclical, not structural... because of the financial sector issues, we think, the recovery will be not as quickly quick as we thought earlier. That's the main issue, "Ranil Salgado, Mission Chief for India in the IMF Asia told reporters on Monday. "Addressing the current downturn and returning India to a high growth path requires urgent policy actions," Salgado added.
However, the government has limited space to boost spending to support growth, especially given high debt levels and interest payments, the IMF warned. It also said that India should avoid using public funds to stimulate growth, but instead focus on cutting debt to free up financial resources that can be used for investment."Economic development projects and enhanced social initiatives in India will be vital in the coming years," the IMF said in its statement.