IMF gives thumbs up to India, cautions China

04/19/2018

NEW DELHI, Apr. 19: India has "quite a high" debt to GDP ratio, but the government is trying to lower it using "the right policies", the International Monetary Fund (IMF) said on Thursday. India's general government debt remained relatively high, at 70 per cent of the GDP in 2017, Abdel Senhadji, Deputy Director, IMF Fiscal Affairs Department, told reporters at a news conference in Washington.

"The debt level is relatively high (in India), but the authorities are planning to bring it down over the medium term with the right policies," Senhadji said. 

On the other hand, he said that for China, overall level of debt is a major challenge and to lower it, Beijing must rethink the sources of revenues for its local bodies which is responsible for 85 per cent of government spending. "The main concern has to do with the level and pace of accumulation of overall debt, private and public. So, the control over the debt level -- in particular, the rhythm of debt accumulation -- is a major challenge for the Chinese economy," he said.

 

 

 


This aside, in a poll conducted by news agency Reuters, economists suggested that India will claim the top spot among the world's fastest-growing major economies this year. The poll, taken between April 11-18, predicted India's economy will expand 7.4 per cent in the fiscal year that began this month. That is in line with the IMF's projection, and is a slight upgrade from the January poll. India is currently a $2.6 trillion economy and poised to break into the top five economies list by 2025.

Economists however suggested that rising trade tensions between the United States and China may restrain India's growth. "India runs the risk of being caught in the middle of the trade spat between the U.S. and China," said Hugo Erken, senior economist at Rabobank. Erken said growth will take a hit if India takes sides as the side not chosen may retaliate by imposing duties. TOI With agency inputs

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