IMV says that during the COVID-19 epidemic, India’s GDP ratio increased from 74% to 90%

The International Monetary Fund raised India’s GDP ratio from 74% to 90% during the COVID-19 epidemic, adding that it expects it to come down to 80% as a result of the country’s economic recovery.

Paolo Mauro, deputy director of the IMF’s Department of Fiscal Affairs, told reporters at a press conference here on Wednesday, “In the case of India, the debt ratio at the end of 2019, before the epidemic, was 74% of GDP domestic product (GDP). ), And at the end of 2020, it is about 90% of GDP. So, this is a huge growth, but it is something that other emerging markets and advanced economies have experienced. ”

“And, in the case of India moving forward, in our baseline forecast, we expect the debt ratio to come down gradually as the economy recovers. In our baseline forecast under the assumption of healthy economic growth in the medium term, we see debt returning to around 80% over time, ”said Mr. Mauro.

In response to a question, he said that the immediate priorities are to continue to support people and firms, and in particular, to focus on the support of the most vulnerable.

At the same time, it is important to assure the general public and investors that public finance is under control and the way to do so is through a reliable medium-term financial framework.

This year, India has already announced its budget. Its adjustment continues. It continues to support health, and it continues to support people. In the following years, it is quite likely that the deficit will reduce as the economy recovers, ”he said.

Given the large increase in public debt, generally more in emerging markets, very large increases in inequality are preferred, to raise revenue in the medium term, Mr. Mauro said.

Vittor Gaspar, director of the IMF’s Department of Fiscal Affairs, said that worldwide debt has risen sharply to 97% of GDP in 2020, given the widespread decrease and contraction in economic activity.

He said that it will grow slowly to 99% but close to 100% GDP before stabilizing downward in 2021.

In 2020, fiscal policy also contributed to falling economic activity and reduced employment. It falls on the scale of the Great Depression.

Mr. Gaspar said that countries with better access to funding, countries with stronger buffers, countries with stronger fundamentals are able to provide more fiscal support during 2020. They can maintain fiscal support for a longer period of time, and have more options. policy making.

This is evident when we focus exclusively on the cluster of emerging markets, he said.

“Therefore, when speaking of emerging markets as a group, when looking at the current situation, ignore the need for fiscal policies to adapt to the circumstances of the country, which is a very important point to make. There are clearly risks, ”he said.

“On this occasion we have turmoil or turmoil in the markets. When it is necessary to take action to restore markets and our membership, the IMF is ready to take action and has a financial capacity of approximately $ 1 trillion.