Urgent need for policy action by India, stimulus package a step in right direction: IMF on COVID-19
Washington: There is more scope for more “urgent” policy actions in India as the economic toll from the coronavirus pandemic is likely to be “large”, a top IMF official said, noting that the fiscal stimulus package unveiled by the government to mitigate the impact of the COVID-19 is a step in the right direction.
In an interview to PTI, Vitor Gaspar, Director of Fiscal Affairs Department of the International Monetary Fund (IMF), said the balance of risks is tilted to the downside, given the uncertainty surrounding the pandemic that has halted economic activities across the world.
“India has limited fiscal space, but also a need to support the health and economic wellbeing of its citizens. In the current exceptional circumstances, the need for policy action is urgent,” Gasper said when asked about India’s fiscal strength and the impact of the COVID-19 on its economy.
“The economic toll from the pandemic is likely to be large. We estimate that growth in the fiscal year 2020/21 will be reduced to 1.9 per cent, reflecting both the domestic COVID-19 impact from the unprecedented national lockdown and weak external demand,” he said.
In the face of the pandemic, which is likely to have devastating human and economic consequences, there is an urgent need for government action, including prioritising spending on health care, providing income support to those most vulnerable, and supporting micro, small and medium-sized enterprises (MSMEs), he said. on COVID-19
“The measures taken to date — such as the provision of food and cooking gas to vulnerable households, as well as cash transfers to poorer households — go in the right direction and are a good start,” Gasper said.
The Finance Ministry unveiled a Rs 1.70 lakh crore economic package on March 26 involving free foodgrain and cooking gas for the poor for the next three months.
The total number of COVID-19 cases in India has risen to 11,439 on Wednesday while the death toll stands at 377.
“To be candid, we see scope for additional spending in these areas, beyond what has already been announced, as well as a need to enact policies which support MSMEs who have been hit by the (appropriate) social distancing measures and nationwide lockdown,” he added.
