India has carried out some really fundamental reforms under Prime Minister Narendra Modi over the period of last four years, says IMF’s chief economist Maurice Obstfeld on Sunday. Praising the phenomenal economic reforms such as Goods and Services Tax (GST) and Insolvency and Bankruptcy Code by the Modi-led government, Obstfeld said that India’s growth has been very solid in four years.
It is to be noted that Obstfeld’s term likely to end this month, he will be succeeded by Gita Gopinath, who is the second Indian to be appointed to the position. However, Former RBI Governor Raghuram Rajan had also served as Chief Economist of the International Monetary Fund.
Talking to media persons, Obstfeld said that the country’s growth performance has been very solid. “I mean, not so much in the third quarter of this year, but generally it has been quite solid,” he added.
“There are important vulnerabilities, so it is important for the reform momentum to be maintained even as an election comes up and for the path of fiscal adjustment to be maintained,” Obstfeld added. He said that one risk that has become much more evident in the last few years has been non-bank finance, usually called shadow banking.
“There is a big challenge of stricter, oversight,” the economist quoted by news agency PTI as saying.
Noting that there has long been a legacy of corporate debt associated with bad infrastructure projects in India, Obstfeld said that it has been very concentrated in the banking system. “But as the government is trying to better oversee the banking system, these loans have migrated to shadow banking and that is an area where more needs to be done to contain financial pressures, which we are beginning to see in India,” Obstfeld said.
Talking about the crucial upcoming general elections in the country, Obstfeld said that there is a reluctance to do anything that would slow the economy.
Also read: Rahul Gandhi hits back at Narendra Modi’s ‘gramophone’ remark in a Twitter post