IMF comes in support of India, guarantees further stimulus to facilitate expenditures on health, food and income for most vulnerable
|On Thursday, the International Monetary Fund held virtual discussion regarding the ongoing state of pandemic which it said was far from over. Closely observing the nations’ struggle with the Covid-19 amid the dwindling economy caused by global lockdown, IMF came to the aid of India, the second worst affected nation in the world, after US. India has so far reported over 4.2 million positive corona cases and more than 70,000 deaths.|
The Washington-based organisation decided to guarantee more fiscal stimulus to India, in order to facilitate expenditures on health, food and income support for vulnerable households, and support for businesses, which have been battered in the times of coronavirus pandemic.
During the conference, Gerry Rice, Director of Communications Department at the International Monetary Fund (IMF), told reporters that the financial institution supported the Indian government’s fiscal stimulus launched to help low income workers and households which have been hit the hard by the pandemic.
“We support the monetary easing and liquidity and regulatory measures for the financial sector and borrowers that have taken place. We believe further fiscal stimulus is warranted, especially expenditures on health, food and income support for vulnerable households, and support for businesses”, said Rice. He spoke in response to questions pertaining to massive drop in the Indian economy in the latest quarter, which was believed to be caused by pandemic-led lockdown.
It’s been over three months since finance minister Nirmala Sitaraman announced economic package of 20 lakhs crore, much of which was accessible in form of easy loans. So the actual financial support never reached the poorest of the strata, let alone the non salaried middle class who had been ignored all along. When taken out loan aspects, the pure giveaway in the package was just a little over 1 per cent of GDP. With the months of lockdown and almost no significant financial assistance, the government faced its worst-ever first quarter GDP, which shrank by 23.9 percent. The government is planning to roll-out second package after finally identifying the “non-salaried middle class and small businesses” as the target audience.
The IMF spokesperson raised the need for not only inducing not only fiscal stimulus but also a detailed well communicated and credible fiscal consolidation plan for the short run, alongside an assured fiscal transparency to draw out the economy from negative territory. Rice said, “We hope that would help boost market confidence, thereby helping to reduce the cost of borrowing, as well as help the economy overall.”
“The contraction and economic activity reflected broad base weaknesses in industries and services with construction, manufacturing, hotels and transportation sectors, suffering the most,” Rice said.
He added, “The near-term growth outlook continues to be clouded by the global and domestic slowdown and uncertainties from the pandemic with significant downside risks. Of course, this is true, not just for India but for most countries.”