The International Monetary Fund (IMF) in its annual report has said that the Indian government must work on reversing the economic slowdown situation that has been one of the engines of global growth.

In its annual report, the IMF revealed that falling tax revenue, declining consumption and investment along with other factors are the reasons behind the slowdown of the fastest growing economy.

Although the country has to boost its growth, the government has limited space to boost spending to support the growth, considering the debt levels and interest payments.

“After lifting millions out of poverty, India is now in the midst of a significant economic slowdown. Addressing the current downturn and returning India to a high growth path requires urgent policy actions.”

– said Ranil Salgado,IMF Asia and Pacific Department

According to the IMF chief economist Gita Gopinath, the Indian slowdown had been a surprise in the downside. She shared that the estimated growth for the Indian economy in the world Economic Outlook will downgrade, considering the fund.

Earlier in October IMF lowered its 2019 forecast by a full point to 6.1 from 7% projected in July.  

Salgado shared that India’s central bank has “room to cut the policy rate further, especially if the economic slowdown continues”.

The Reserve bank of India (RBI) has cut down its lending rate by five times this year. However, earlier this month in its last meeting it defied the expectations by keeping the policies unchanged.

The Central Bank also lowered in annual growth forecast from 6.1% to 5 per cent considering the contraction seen in consumer demand and manufacturing activities.

Further, Salgado expressed that the government needs to “reinvigorate the reform agenda including restoring the health of the financial sector in order to enhance its ability to provide credit to the economy”.

The Indian economy in the July-September quarter saw the steepest decline in more than six years. The country’s economy fell from 7.0 % a year ago to 4.5%- reveals government data.