Applauding India for prioritising public investment in its annual budget, the International Monetary Fund has urged the country to prioritise food security and expand transfers to the vulnerable in the wake of the global economic crisis triggered by the war in Ukraine.
Paolo Mauro, Deputy Director, Fiscal Affairs Department of the IMF told reporters on Wednesday during a news conference held here on the sidelines of the annual Spring meeting of the IMF and the World Bank that the challenges coming from the economic consequences of Russia’s invasion of Ukraine were “quite sever”.
Observing that inflation in India is somewhat elevated, he said that it is a little bit above the comfort zone for the Central Bank, which is already addressing that issue. On the fiscal front, the budget is approximately neutral, which seems to be sensible at this time, he said in response to a question.
“But given the rise in food prices, given the rise in energy prices, clearly this is a situation in which households are feeling the pain of the situation,” Mauro said. “So, what we recommend here is to prioritise food security first and foremost, expand transfers to the vulnerable. India has an effective history of in kind transfers and also cash transfers to the population. We certainly would want that to continue and to be expanded,” the top IMF official said.
Beyond that, in the budget, one good part of that is that public investment is being prioritised, Mauro said. “The country has major infrastructure needs, and we would certainly encourage that that investment on infrastructure be directed in some part to renewables because it is so important for India to transition away from coal and move toward more renewable sources of energy that creates jobs, and also reduces local pollution, which has so many adverse effects on health,” said the top IMF official.
(With PTI inputs)