India needs to stay on fiscal consolidation track: IMF Chief Economist Gita Gopinath

Election year or not, it is important for India to stay on the path of fiscal consolidation, International Monetary Fund (IMF) Chief Economist Gita Gopinath has said. In an interview to WION on the sidelines of the World Economic Forum in Davos, she also forecast that India was likely to remain the fastest growing major economy in the world in 2019.
“Indian economy will grow at 7.5 percent this year. It will make India one of the fastest growing major economies of the world,” Gopinath said.
She however worded her global economic outlook for the year a bit more cautiously. “Our outlook is that global growth will slow in 2019, but it will be moderate slowdown, there is no need to push any panic button right now,” she said.
Gopinath also said the ongoing trade war between the two largest economies in the world – US and China, though she didn’t name them – was among the key factors that weighed the global economic outlook. “We are really hoping to see an end to it. It is having a negative impact on economies. It is one of the biggest risks going forward,” she said.
Gopinath had a word of caution to those in charge of Indian economic and financial policy making, especially in light of the coming election season, when asked if election-oriented spending and sops by the Centre could end up having an impact on the Indian economy, she said, “It is important for India to stay on fiscal consolidation track. Polices that make India incur lot of expenditure will definitely not be good for the economy.”
The Narendra Modi government is set to unveil its Budget for the coming financial year. It is expected that the speech could be used as a platform to announce a number of sops, including income tax relief aimed at the middle class.