Covid Pushed 4 Crore Into Extreme Poverty In India: IMF Chief To NDTV

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  • Published On: October 21, 2020
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International Monetary Fund (IMF) chief Kristalina Georgieva speaks to Dr Prannoy Roy about the challenges posed by the coronavirus pandemic and the role being played by the IMF to help developing countries cope with them.

Speaking to NDTV, Ms Georgieva talks about facing a global crisis in the very first year of taking over as the IMF chief. "We have provided massive support to our members in need, over a hundred billion dollars so far," Ms Georgieva said.

The IMF chief talks about the importance of testing as a measure to contain the spread of coronavirus and said, "India is one of the countries that has taken a very aggressive step to making testing more available. When you test more, you can allocate potential sources of the pandemic and then isolate people rapidly."

Here are the highlights of Dr Prannoy Roy's conversation with IMF Chief Kristalina Georgieva:

The coronavirus pandemic has pushed more than 40 million people into extreme poverty in India

"I have not expected that my first year would be a year like no other. But I can tell you, I'm very proud of what the IMF has done. We leaned forward early in the crisis. We have provided massive support to our members in need, over a hundred billion dollars so far. For 81 countries, never in the history of the IMF have we done so much, so fast. And beyond the money, what we strive to do is to help countries understand what must be done in this crisis and learn as quickly as possible from each other via transmission line for our membership in this difficult time": Kristalina Georgieva

Well, it is sure that in this crisis, women stepped up. There is a famous saying of Eleanor Roosevelt that women are like tea bags. We don't know how strong we are until we are put in hot water. And in hot water, women do well: Kristalina Georgieva

I had the life experience of many of the countries in difficulties that the IMF is helping. In the nineties when Bulgaria was going through a transition from central planning to markets, I remember getting up at four o'clock in the morning to queue for milk for my daughter. I saw my mother's life savings evaporate because of hyper-inflation, and all of this taught me two very important lessons. One, to recognize the difference between bad policies and good policies. It matters to have good policies in place. And two, that macro decisions have micro consequences. And we always have to think about how the decisions we make impact the lives of people, especially people who have no access in the high corridors of power: Kristalina Georgieva

There are two other things that helped enormously. One is that I was, for five years, Humanitarian Commissioner in the European Union. I had a front seat in the most dramatic crises, like the Haiti earthquake, the floods in Pakistan, the triple disaster in Japan, or the war in Syria and the refugees that had to leave their homes because of it. And all of this is extremely helpful when you are in a position that deals with crisis, because what it teaches you is one, anticipate crisis. We are in more shock from the world. Two, act decisively. Three, care about the most vulnerable people. And in this crisis, I truly benefit from having lived through this experience: Kristalina Georgieva

My small country, Bulgaria, has always been fascinated with India. And in the days of Indira Gandhi, there has been friendship between the two countries. And it so happens that my cousin was the Bulgarian journalist assigned in India. So, she would come and tell us these fascinating stories about the country. So, I developed a huge interest in the culture, history and the people of India. And when I was able to travel, India was one of the first destinations. And what I saw in India is this incredible dynamism of the nation. Such a fantastic place to feel that there are values on which we can all unite: Kristalina Georgieva

The world economy will be higher in 2021 than 2019 by 1%

What we are seeing is a tremendous shock caused by the pandemic. And let me stress, first and foremost, this is the human tragedy. We have lost more than a million lives already. A hundred thousand in India. But also an economic shock that we have not experienced since the Great Depression. For the first time we brought the economy to a standstill on purpose. We asked producers not to produce, consumers not to consume, and that has taken a portion of potential growth that we would never get back. More importantly, what next? So, we acted very decisively in the first months of the crisis. Central banks and finance ministries together put a sound floor under the world economy. The IMF did its own part. We contributed to the stabilisation. However, until there is a durable exit from the health crisis everywhere, we expect an uneven, partial, uncertain recovery. In our projections, we put our trust in our scientists and we expect that there will be vaccine available sometime between the beginning and middle of next year. And then it will take some time for this vaccine to be applied everywhere. Only then we can talk about sustained recovery from the pandemic. And as you can see, in many places, there is a surge of a second wave. That means we will retreat somewhat from economic activities again: Kristalina Georgieva

World will lose 7% of its GDP vs normal growth due to the coronavirus pandemic

In our forecast, we actually are calibrating different scenarios. One in which we have accelerated the delivery of vaccines. And the recovery is faster. And another one in which we do not have vaccines and we have to continue with containment measures. But let me make two points. One, today we know much more about this pandemic that we knew in February, March. We know that there are measures we can take without a full lockdown to restrict the spread of the virus. What is key is whether our health system can handle the number of cases, the number of people that are getting sick. And we have expanded in practically almost everywhere the capacity of the health system. And then we added the very important protection, testing. And I want to give credit to India: Kristalina Georgieva

India is one of the countries that has taken a very aggressive step to making testing more available. Why is testing important? Because when you test, you can allocate potential sources of the pandemic and then isolate people rapidly. Rather than closing down the whole economy, you only close down places where there are spikes. And then we also know today that wearing a mask, social distancing, washing hands, being sure to self-isolate. If I know that I have been in contact with somebody who is sick, stay home for 14 days. All of this is helping us weather the second wave. Hopefully from an economic standpoint, significantly better than the first one. Nonetheless, confidence would not return until we get out of the pandemic. It would not fully return: Kristalina Georgieva

While India's decline is worse than world decline, bounce back will be stronger

India will not bounce back to pre-COVID levels by 2022

What can I suggest to India based on what we are learning in this crisis? One, do not withdraw support measures prematurely. On the contrary, India could do more in a targeted manner for the most vulnerable people and also for the smaller, medium size enterprises to prevent massive bankruptcies. Two, continue with the reforms. And there we ought to give credit to India. We have a farm bill. There is a labour market reform. Very important for countries to pursue structural reforms, to be more resilient in the future. And India is choosing to do that: Kristalina Georgieva

India will lose 12% of its GDP due to COVID pandemic vs normal non-pandemic growth

What we see in emerging markets, countries that are compatible to India, is indeed a different share of direct versus below the line contributions. In India it is 2% above the line, 4% below the line. So, moving this further and increasing support somewhat definitely is going to help India. You're going to have a festival season coming. We know this is a good time to give a boost to the economy. I hope it would be used: Kristalina Georgieva

India has spent less money on its stimulus than the average for developing countries

India's below-the-line stimulus (equity, loans, guarantees) has been better than the average developing countries during the pandemic

India has a very good digital ID system that allows you to direct targeted support to the most vulnerable. And it is a very good time to use this to the fullest, to reduce the number of people falling into extreme poverty, and also to expand opportunities for entrepreneurship, especially women. We see in this crisis that women act responsibly for their families. So, empower the Indian women even more: Kristalina Georgieva

Now is the time to support the economy. And you want to get out of this crisis faster, put more money in the hands of women: Kristalina Georgieva

I have this unique qualification for the crisis of tomorrow. I'm a trained environmental economist. My PhD is in environmental economics, and I know that the pandemic is a very dramatic shock for the world. But similarly, the climate crisis already is devastating in many places. You see it in India. And it can be even more devastating unless we act, unless we shift to low carbon climate resilient development. And I have this privilege to lead the firm at the time when preventing the climate crisis is becoming a global imperative: Kristalina Georgieva

Other Asian countries will emerge from the COVID pandemic better than India

We are now in a unique place in our history. We have a chance, by getting out of the pandemic, to shape up an economy of the future that is greener, digital and a fairer economy. Why? Because we are going to deploy, we are already deploying and we will deploy more resources, to move the economy out of the damage caused by the Corona crisis. As we do that, it is just common sense not to build the economy of yesterday. But of tomorrow. And the good thing is that there are many actions we can take that are good for growth, good for jobs, and good for an environmentally and socially sustainable future. For example, if we are to direct the fiscal stimulus towards bringing down carbon emissions, in other words, something that India is actually in the lead, moving to renewable energy away from carbon generating industries. If we concentrate on restoring land, a lot can be done that is labour intensive reforestation, mangrove restoration, all these are activities that generate jobs. And at the same time, they put us on a more sustainable path. And in addition, something that this crisis has accelerated, we are moving in a digital economy. If there is one silver lining of the pandemic, it is accelerating that transformation. Well, if we are to be successful, we have to concentrate on skills, on education. And of course, when we do that, we create a more equitable world of tomorrow. So, take this crisis as a sobering call to prevent the world of crisis. We know that we can have a more resilient economy, more resilient society if it is greener, smarter, more inclusive: Kristalina Georgieva.

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