Indian economy needs additional reforms: KKR's David Petraeus

The Indian economy needs major reforms in areas like land, labour and banking, in addition to the measures already undertaken like the GST and bankruptcy law, KKR Global Institute chief David Petraeus said on Friday. "I think there is...really a need for additional reforms in addition to the GST, bankruptcy law, banking for the unbanked.

"Other reforms that have been made and have been impressive and did propel India's growth for a number of years until the gradual slowdown about a year or two prior to the pandemic," he said during a virtual session of the India Global Week 2020.

Petraeus, former director of the Central Intelligence Agency (CIA), added there is also a question of how India can implement some of its reforms like GST effectively.

"But then what about these other areas? And these are huge areas -- we are talking about labour and land reforms. And then again, the bad bank (loan) problem is not a trivial issue," he said.

"India has to figure out what to do about these structures that are essentially where various degrees of insolvency separates the bad banks from the good banks. It needs to take another variety of measures in the financial arena," he added.

If India can do all of that, given the demographics, market size, advantages and skills, it can pull itself forward very impressively, he emphasised.

The IMF on June 24 projected a sharp contraction of 4.5 per cent for the Indian economy in 2020, a "historic low", citing the unprecedented coronavirus pandemic, but said the country is expected to bounce back in 2021 with a robust 6 per cent growth rate.

Meanwhile, a top IMF official on Friday said there is room for more fiscal support in India in the near term, particularly for vulnerable households and small and medium enterprises, given the severity of the country's economic situation due to the COVID-19 pandemic.

Vitor Gaspar, Director of the International Monetary Fund's Fiscal Affairs Department, told PTI that a complete and successful implementation of the existing support measures (in particular, food provision to households) is of paramount importance.

"Given the severity of the economic situation, in the near-term there is room for more fiscal support, particularly for vulnerable households and SMEs (small and medium-enterprises)," he said.