The government is now trying to cap the fiscal deficit for 2019/20 at 3.8% of GDP. (Photo Credit: Stock Image)
Adding to the slowdown woes, latest report by Reuters say that India may miss the fiscal deficit target by 30-50 basis points. “The government is now trying to cap the fiscal deficit for 2019/20 at 3.8% of GDP from the target set during the budget presented in July,” the Reuters report quoted two officials as saying. The report comes on a day when former Prime Minster Manmohan Singh launched a searing attack against the Narendra Modi government on the economic slowdown. “IMF has come with statement that India's growth rate durin current fiscal year will be only 6.1% as against 7.3% mentioned some months ago. With growth rate declining year after year, I don't think there's any hope of economy reaching the target of $5 Trillion by 2024,” Singh was quoted as saying.
“I've said this publicly before that to reach a goal of $5 Tn by 2024,as against $2.7 Tn that we had in 2018,would require a growth rate of 10-12% pa. What's happening in BJP regime is that govt is faced with prospect of a declining rate of growth year after year,” he added.
However, Union Finance Minister Nirmala Sitharaman maintains that government is working on various reforms. Investors can find no better place in the world than India that has a democracy loving and capitalist respecting environment, Sitharaman said. She also assured international investors at an interaction session at the IMF's headquarters that the government was continuously working to bring reforms. "It (India) is one of the fastest growing (economies) even today. It has the best skilled manpower and a government that is continuously doing what is required in the name of reforms, above all democracy and rule of law," Sitharaman said on Wednesday.
As against India's real growth rate of 6.8 per cent in 2018, the IMF in its latest World Economic Outlook released on Tuesday, projected the country's growth rate at 6.1 per cent for 2019 and noted that the Indian economy is expected to pick up at 7 per cent in 2020. In India's case, there has been a negative impact on growth that has come from financial vulnerabilities and the non-bank financial sector, and the impact on consumer borrowing and borrowing of small and medium enterprises, Gita Gopinath said.