The International Monetary Fund is all set to cut the growth estimate for India “significantly”, its India-born chief economist Gita Gopinath said on Tuesday, December 17. IMF had released an estimate in October and will be reviewing the same next month in January, Gopinath said at the India Economic Conclave organised by Times Network.

A fall in consumption, lack of private investments and sluggish exports are being pointed at for a slower GDP growth which slipped to a six-year low of 4.5 per cent in September.

Gopinath said India is the only emerging market which has experienced a surprise of this kind.

“If you look at recent incoming data, we would be revising our numbers and come up with numbers in January, and it is likely to be a significant downward revision for India,” Gopinath said.

The IMF in its October forecast had projected 6.1 per cent growth for India in 2019 and the same to go up to 7 per cent in 2020.

Gopinath’s Prescription To Ailing Economy 

Gopinath expressed her apprehensions about the country achieving $5 trillion GDP target by FY25 and chose to present her case arithmetically.

The 38-year-old economist said India will have to grow at 10.5 per cent in nominal terms as against 6 per cent in the last six years, and 8-9 per cent in real terms in order to achieve the set target.

She insisted the government introduce land and labour market reforms if India were to achieve its $5 trillion targets. She also said that it is good for an economy to have aspirations and India should be doing all in order to achieve the number.

Gopinath warned that the fiscal situation in India is “challenging” and the country will certainly breach the 3.4 per cent deficit target. She also acknowledged the cut in corporate taxes announced earlier this year but ruled that there was no revenue increasing measure announced parallelly.

India’s problems are in the financial sector and the policymakers should address the same at the earliest, she said, mentioning the delays in non-performing assets and the lack of capacity in the National Company Law Tribunals in handling the cases.

She also said that the issue of rural income growth needs to be addressed which should also include ways to increase farm productivity which is very low as compared to the world average.

Also Read: RBI Cuts India’s Annual Growth Rate From 6.1% To 5%