The International Monetary Fund (IMF) in its latest report states a reform agenda for India to push growth up from 5-6 percent in the Q1FY20. Annie-Marie Gulde, deputy director-Asia Pacific, IMF in an interview with CNBC-TV18 said that India needed to address structural issues in order to enhance growth.

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“We still see a possibility for growth to increase in the second half, but at this stage there are a few structural issues that hold back growth and those need to be taken in conjunction with the measures that have already been taken such as monetary policy action that we feel was right,” said Gulde.

“Therefore, at this particular point one of the areas that we feel is particularly important is the financial sector; there has been uncertainty about the financial sector based on some of the developments that we have seen and the low level of credit growth that we are seeing that has structural issues as well. So addressing the financial sector issues in a way that enhances confidence will have immediate effect on the economy even if the reforms will take somewhat longer to take hold,” she added.

On bank credit, Gulde said: “Defining reforms and announcing them will have a confidence effect because at this stage a part of the problem is confidence.”

She added: “In addition, there are efforts on the fiscal sector; there is no room for fiscal stimulus but we think that in the monetary area there is still room. We expect that some of the measures that have already been taken are going to work themselves through but maybe some more room for monetary policy actions to take place.

“However, let me be clear that all of these measures need to be accompanied by structural measures and by a very clear direction otherwise they are not going to take hold because expectations are clearly an important part of getting growth going.”