THE GIST of Editorial for UPSC Exams : 17 october 2019 (Another grim reminder: On IMF's GDP projections (The Hindu))

Another grim reminder: On IMF's GDP projections (The Hindu)

Mains Paper 3: Economy
Prelims level: GDP growth
Mains level: IMF’s slowdown concerns on economic growth

Context

•  The International Monetary Fund, recently, followed the World Bank in reducing its forecast (to 6%) for India’s economic growth in the current financial year, to 6.1%.
•  The South Asian Economic Policy Network Survey predicts growth to be 5.7% this fiscal.

Issues

•  The World Bank describes this to be a cyclical slowdown, exacerbated by global influences. It highlights the problem to be that banks have the depressing burden of bad loans.
•  The World Bank has also warned that nonbanking financial companies’ significant share in total credit and their linkages with banks pose risks.
•  Also, sharper than expected slowdown in major economies such as the U.S. and Eurozone could have severe spillover impacts, the bank noted that India was vulnerable to being affected immediately and over a longer duration by real GDP shocks in these advanced economies.
•  In the case of a Chinese GDP growth slowdown, the onset of the impact on India would likely be delayed but substantially more pronounced

Way forward

•  IMF has urged structural reforms in labour and land laws to boost job and infrastructure creation.
•  Also increasing domestic consumption should be one of the measures to improve the condition of the slowdown.
•  It may, therefore, make a lot of sense to heed Nobel laureate Abhijit Banerjee’s prescription and put more money in the hands of consumers, especially those in the rural areas, to reinvigorate demand.

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Prelims Questions:

Q.1) Consider the following statements:
(1) A ‘Flamingo Festival’ is held here annually.
(2) It is famous for migratory birds.
(3) A barrier island separates it from Bay of Bengal.
(4) It is the second largest brackish water lake in India.

The description given above is most suitable for which of the following lakes?

(a) Chilika Lake
(b) Kodaikanal Lake
(c) Pulicat Lake
(d) Sundarbans

Answer: C
Mains Questions:
Q.1) Sharp cuts in growth forecast by the IMF and World Bank underline slowdown’s severity. Critically analyse the statement.