File photo Photograph:( Reuters )
In its annual review, the IMF blamed slowing consumption and investment for crippling the country's GDP growth
Amidst a pronounced economic slowdown in India, the International Monetary Fund (IMF) issued a warning today calling for immediate action to fix the slowdown. According to IMF, ''urgent policy actions'' are required to reverse the slowdown.
In its annual review, the IMF blamed slowing consumption and investment for crippling the country's GDP growth. The effects are more pronounced because of falling tax revenue, considering India was one of the fastest-growing economies in the world just last year.
According to the report, more efforts by the Indian government are needed to fix the slowdown.
For long, the IMF has maintained a macroeconomic outlook on India which has become more subdued in recent years.
Watch: IMF - India now in midst of major economic slowdown, needs urgent action
The report stressed the importance of long-term remedies but also said that growth has been strong in recent years. However, growth has not led to job creation and low food prices, which is contributing to rural distress.
Earlier in October, the IMF had slashed its forecast for Indian GDP's growth by nearly a full point to 6.1 per cent pertaining to the financial year 2019-20.
Additionally, the organisation has projected inflation to remain at around 3.4 per cent, with effects of less demand set to become pronounced over the next few months.
Food prices have increased in the country lately, pushing the retail inflation rate in November to a three-year high of 5.54 per cent.
The industrial sector output shrank for the third month in a row in October by 3.8 per cent, further indicating a slowdown in the economy.
Even then, India's fiscal deficit has already crossed 7 trillion Rupees, surpassing the annual target in seven months.
The Reserve Bank of India recently tried to contain the slowdown by cutting the key lending rate five times this year to a nine-year low. However, the policy was kept unchanged in a key meeting earlier this month.