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IMF to Nirmala Sitharaman: India needs these reforms urgently; economy weaker than projected earlier

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India needs further reforms and fiscal consolidation measures are needed owing to rising debt levels, IMF said, even as S&P kept India's outlook stable lifting sentiment amid the slowdown. The Indian economy needs more structural and financial reforms owing to surging debt levels while keeping mind more accommodative fiscal stance in budget 2020, IMF also said. In response to the question by Finance Minister Nirmala Sitharaman, IMF spokesperson Gerry Rice said that along with reforms urgent measures are needed as a part of medium-term fiscal consolidation strategy by the government.

On Thursday, S&P Global Ratings affirmed India's long-term sovereign rating at 'BBB-'. It also said that the growth is expected to revive in two to three years. The global rating agency said that India's growth is expected to stabilise and rebound from the ongoing lows and the fiscal deficits are likely to remain in a range of the projections for the coming two years. However, it had flagged the rising fiscal deficit and increasing government debt. S&P expects limited fiscal consolidation in the coming years, even as fiscal deficits have surpassed the government’s actual plan.

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India's growth estimate for FY20 was lowered in January 2020 by IMF to 4.8 per cent. The first GDP advance estimate by the government has projected the economy to grow at 5 per cent in the ongoing fiscal. In Q3FY20, India's economy grew at a mere 4.5 per cent. The government has announced a slew of fresh measures in budget 2020 to revive the sluggish economy. Even in the later part of the last year, the government had come up with reforms to push the growth engine of the economy.