IMF backs India’s ‘very wise’ COVID-19 lockdown move despite huge economic cost

United Nations: The International Monetary Fund (IMF) has supported India’s “very wise” determination to impose a nationwide lockdown to fight the coronavirus pandemic despite the ensuing economic slowdown.

Changyong Rhee, the organisation’s director of the Asia and Pacific Department, stated at a information convention on Wednesday, “India entered the pandemic turmoil in the midst of a credit crunch induced slowdown and its recovery prospect becomes more uncertain.” The IMF drastically revised India`s progress charge projection for the present fiscal yr to 1.9 per cent from the 5.eight per cent made in January, which was decrease than the 7 per cent made in October.

Rhee stated that India`s strict motion in opposition to the COVID-19 pandemic “can cause a drop in economic activity (and) growth rate will go down definitely, but I think that is a very wise and important decision to minimise the long-term cost of this disease spread.”

He stated that the fiscal stimulus, in addition to the financial coverage easing adopted by the Indian authorities and the Reserve Bank, are in the precise path, however whether or not they are going to be sufficient “depends on how this containment policy which is just adopted, how successful it will be”.

He stated that he hoped that India`s efforts shall be profitable, “but if the situation becomes aggravated, then I think in the short run they have no choice but to use more fiscal and monetary policies to contain the slowdown of the economy”.

After the COVID-19 disaster is over, he stated India should return to finishing up structural reforms and take steps for extra inclusive progress by specializing in priorities just like the infrastructure. Surveying the Asian area, he stated that for the primary time in 60 years its progress shall be at “a standstill” – or zero per cent – this yr.

But he added that even this efficiency shall be “better than other regions.” Similarly, India with its paltry progress charge projection of 1.9 per cent this yr would be the fastest-growing main financial system on the earth, in keeping with the IMF`s projections.

And China with 1.2 per cent comes subsequent. IMF initiatives world economic progress to go beneath zero — the financial system shrinking by three per cent — this yr. The economies of developed nations are projected to shrink by 6.9 per cent, the US financial system by 5.9 per cent and the Euro space`s by 7.5 per cent.

Rhee stated, “For 2021, there is hope: if containment policies succeed, we will see a rebound in growth. However, it is highly uncertain how this year will progress.”

The IMF expects India to rebound within the subsequent fiscal yr with a progress charge of seven.four per cent, greater than the 6.5 per cent projected in January. For the area as an entire, Rhee stated the primary precedence is to assist and defend the well being sector to comprise the virus and introduce measures to gradual contagion.

If there will not be sufficient fiscal assets to hold out these, nations should re-prioritise from different expenditures, he added. Because the coronavirus containment measures are severely affecting economies, nations should present focused assist to hardest-hit households and companies. He stated.

Jobs and industries, particularly small and medium-size enterprises, should be protected straight, not simply via monetary establishments, he stated.

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