Reportedly International Monetary Fund (IMF) Chief Economist Gita Gopinath said india has the ability to increase on-budget spending to mitigate economic risks, especially for vulnerable households and small and medium enterprises. Her comments came during an exclusive conversation with india Today tv news director rahul Kanwal. When asked about her view on India’s financial relief package, Gopinath said the package was substantial but lacks on-budget spending.
She said, “If you look at the aggregate set of measures including fiscal side, monetary side and the financial sector support, then it is quite substantial.” “We think the measures being undertaken on the financial sector front, providing liquidity for NBFCs, HFCs and making credit available through risk mitigation measures on the banking side.” However, Gopinath indicated that a large portion of the economic relief package was “below the line off-budget spending” as opposed to on-budget spending. Off-budget spending is the expenditure that is not funded by the government through the budget.
Several experts have said that off-budget spending does not provide the actual extent of government spending. Gopinath said “India has done more on what we call below-the-line off-budget spending as opposed to on-budget spending. So, 4.9 per cent GDP is below-the-line spending and 1.5 per cent is on-budget spending. We think that more can be done”. The IMF chief economist also explained why the international body called for direct income support in the context of India.