|
According to a senior official at International Monetary Fund (IMF), India and China are contributing effectively towards the economic recovery of the world with growing at a pace of 7 and 10% in the same order.
While addressing the question on the role of both the nations in global economic recovery, the Deputy Director at Asia and Pacific Department, Kalpana Kochhar said "It's actually true, just by looking at the numbers and the weights that they have in the global economy".
She added, "When you have two relatively large economies growing at 7 and 10 percent, respectively, India and China, they are contributing quite a lot to global growth".
Referring to the forecast made by IMF that global growth would be somewhere about 4% in the coming year, in which rich economies are adding less than 2% only, Kochhar asserted “So the rest of it is in fact coming from emerging markets, and from within emerging markets, a large part from China and India."
Pointing out to the fact that India was among the first nations to emerge from the crisis situation, she also added "So it's a significant contribution that's coming from these two countries."
"It benefited from the normalisation of global financing conditions and the return of risk appetite, but also benefited from fiscal stimulus that was already in the pipeline and from timely monetary and further fiscal easing after the crisis broke out" - was further pointed out.
After wrapping up the annual Article IV consultations with India the previous month, IMF has predicted a 6.75% growth for India for the financial year concluding on March, 2010. Later, the rate of growth was revised to 8% for the year concluding on March, 2011.
According to Kochhar, International Monetary Fund "believed there are a lot of indications already in the pipeline that suggest that this recovery will in fact occur and will broaden”. However, “along with the recovery, we've seen an upward rise in prices. Inflation has picked up. Some of it is due to food, but some of it is also due to demand pressures."
In the wake of this, Kochhar added IMF supported the decision of tightening the monetary policy taken by the apex bank of India i.e. Reserve Bank of India (RBI) the previous week. She also said, "And we believe that, given current trends, there should be further gradual withdrawal of monetary accommodation."
Kochhar informed that the stimulus packages played a vital role during the period of financial crisis. However, in present time, it has added to the scenario of double-digit deficit and debt has reached about 80%.
According to the recommendations of the IMF, a strategy should be made to tackle this financial condition and in the coming budget it should be based on debt target and marginal expenditure rules.
Nevertheless, it is opined that fixing debt target only is not adequate. It needs to have support from the angles of revenue as well as expenditure too, as says Kochhar.
IMF also suggested focusing on reforms in financial sector, especially the reforms that would boost massive infrastructure investment that the Indian government is looking for in coming few years.
The Pioneer
February 5, 2010
|
