The International Monetary Fund (IMF) Chief Economist Gita Gopinath stated that there will be a higher projection for India's economic growth by 2020.
"India has got hit on many fronts in this year. We think of this economic slowdown as a cyclical downturn. We have downgraded India's economic growth significantly for 2019 to 6.1 per cent at present. However, we are projecting it back to 7 per cent in 2020," said the Indian-American economist.
According to Gita, Rs. 13,000-crore fraud happened at state-run Punjab National Bank and the collapse of India’s biggest non-banking finance companies, IL&FS, has affected the country’s financial sector.
The Mysore-born economist who joined the IMF in January is the first woman to occupy that post in the international organisation.
Earlier, she claimed that India has been facing a negative impact on its economic growth and it is learned to be due to the financial vulnerabilities in the non-bank financial sector and which also affected borrowing by consumers as well as small and medium enterprises.
"It is being a little less optimistic than we were a few months ago in our nation. It is down now. Almost 50 percent from our previous forecast. There is a weakness in the rural income growth completely. There are many issues with the non-banking financial sector," she said.
As per reports, amid the severe stress in key sectors in India, from manufacturing to finance, a bulk of loans are being granted to consumers.
"The corporate tax cuts and policies that were recently implemented will truly help rural income growth, all of these should help with recovery," she added.
The government has taken effective measures to cope with the situation. The mega consolidation plan for state-run banks to strengthen the financial system and economic growth has expanded its slowest pace in more than six years in the first quarter of the 2019-20 fiscal year.