IMF's Chief Economist Gita Gopinath has said that it would be damaging for India to start tightening policy support in the midst of the COVID-19 pandemic. She said there is scope for the Indian government to provide more direct support to people. She also said India should come out with a credible medium-term fiscal plan that can be achieved once the pandemic ends.
Noting that India's debt-to-GDP ratio has gone up to 85 percent, Gopinath said the country's banking sector is vulnerable due to rise in bad loans during the pandemic. She also stressed on reducing wasteful expenditures in the upcoming Budget and added that steps need to be taken for a more effective Goods and Services Tax (GST) collection and more credible disinvestment plan.
IMF's Chief Economist further pointed out that India has relied heavily on indirect support measures, including loans, equity and credit guarantees during the pandemic. She also opined that so, there is scope for India to provide more direct support to Indians. She added that the collapse of the global economy in 2020 due to COVID-19 pandemic was much more severe than the Global Financial Crisis (GFC).