Gita Gopinath, the Chief Economist of the International Monetary Fund (IMF), said that India has entered 2021 with better prospects than what was expected last year and has been able to restore activity faster than many economies.
Gopinath further said that a larger budget deficit than what India usually has can be expected.
In an interview with CNBC-TV18, Gopinath also said that the country must now focus on improving the efficiency of Goods and Services Tax (GST) collections, divestments. She added that as growth returns, the deficit will come down gradually.
"Too soon to say if trade tensions-related risks have eased," she told CNBC-TV18.
As for banks, Gopinath stated that strengthening IBC should be a priority, especially since non-performing assets (NPAs) are set to rise. The economist also suggested that the government should look into investing in public sector banks.
"Bad bank is just one idea, see other ideas to consider for NPA management," Gopinath said, adding that she expects interest rates to remain low for a while.
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