According to IMF Deputy Managing Director Gita Gopinath, the Indian economy is doing pretty well, primarily driven by big public investments. She said further reforms were needed if India were to remain at this level of growth and generate enough jobs.
Gopinath, who sees India jumping to being the world's third largest economy by 2027, said such growth has to be inclusive and broad-based. "It is crucial for this growth to be inclusive and create enough jobs so that the gains from growth are shared widely," she said.
At her alma mater, the Delhi School of Economics, Gopinath delivered a lecture on how fiscal consolidation could feed long-term growth. she said, “From a long-term perspective there is no trade-off between fiscal consolidation and growth. If a country does not have sufficient checks and balances on its fiscal situation, it is likely to end up in a crisis. Therefore, there is a reason why governments should engage in fiscal consolidation. Now, there is, of course, a question in the near term by design, reducing your fiscal deficit in the short term could have a negative effect. However, there are ways to do it that do not have a significant negative impact.”
Her comments take her close to the compromise worked out by Finance Minister Nirmala Sitharaman in slashing the fiscal deficit to 4.9 percent of the GDP in her 2024-25 budget, with an approach of fiscal consolidation to stabilize growth in the economy. A lower deficit not just helps the cause of controlling inflation but, in tow, reduces government borrowings, freeing up more funds in the banking system for companies to invest and generate jobs.
She was also a proponent that other women should hold positions of leadership. She noted that it was essential for women to dig deep within themselves if they were to get that far in their professional lives.
“First and foremost, it’s my appeal to these wonderful women that we need more women in leadership positions in the world. Certainly, progress has been made. At one point, it was unthinkable that the managing director of the IMF would be a woman but we now have a current managing director who is a woman, and the previous managing director was also a woman. So, things have changed. However, it absolutely critical that we see more women in leadership positions. For that, you will need to rely more on your inner strength than men have to,” Gopinath said.
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