Gita Gopinath, the former Deputy Managing Director of the International Monetary Fund (IMF), stated that the Centre's approach towards shielding the economy from fuel price shocks was akin to an "implicit subsidy to households and companies".
While speaking to news agency ANI on Wednesday, she stated that the Centre has not allowed fuel pump prices to surge as much as expectations, and noted that more targeted support was a "good way to go".
“The govt is already to some extent supporting the economy because it has not let prices at the fuel pump go up by as much as one would expect it to, given how much world oil prices have risen…that itself is like an implicit subsidy to households and companies…at this current moment, providing more targeted support is a good way to go," Gopinath told ANI.
She added that engaging in further reforms in terms of improving the ease of doing business, and "having a positive story on AI" would be helpful to the economy and aid India's domestic currency.
"These are the kinds of actions that would help increase interest in India as a destination for investment capital flows, and that would also take the pressure off the rupee," Gopinath stated.
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The former IMF chief economist expressed support for India's bid to gradually shift away from fossil fuel import dependence and focus on renewable energy. She also recommended the adoption of nuclear energy as a way to decreases India's reliance on foriegn supply chains.
“One of the areas of supply where India can do more on is on the energy front. Shifting away from reliance on fossil fuel imports towards more reliance on renewable energies, but also nuclear, which can help reduce the import bill and reduce the dependence on foreign supply chains," Gopinath said.
Gopinath also said that India signing more trade agreements is "good news" and that it will help make India "play a bigger role in global supply chains than it is doing right now."
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