India needs a 'lot of investment', environment must be created for it: IMF chief economist Gita Gopinath

Even as the heat and dust kicked up by the controversial statement of Commerce Minister Piyush Goyal on Jeff Bezos commitment to invest $1 billion in India is yet to settle down, International Monetary Fund's chief economist Gita Gopinath has said that there is a need for huge investment in India and what's more, there is a need to encourage it, said a news report.

A day after the world's richest person Jeff Bezos announced fresh $1 billion investment in India, Goyal on Thursday said his firm Amazon was not doing a favour to the country by the investments and questioned how the online retailing major could incur such "big" losses but for its predatory pricing.

However, Gopinath said India needs a lot of investment and an environment has to be created for major investment as this will help raise the country's potential for growth, a report in NDTV said.

''India needs a lot of investment. It's important to encourage investment more broadly with the mandate of the country. We need to revive domestic investment in India, consumption spending is weak. So I think the environment has to be created for greater investment because that's what will raise the capital stock and raise India's potential growth,'' Gopinath was quoted as saying in the report.

File image of Gita Gopinath. Reuters

On Monday, Gopinath said growth in India slowed sharply owing to stress in the non-banking financial sector and weak rural income growth.

India's growth is estimated at 4.8 percent in 2019, projected to improve to 5.8 percent in 2020 and 6.5 percent in 2021 (1.2 and 0.9 percentage point lower than in the October WEO), supported by monetary and fiscal stimulus as well as subdued oil prices, the IMF said.

Gopinath also said the pickup in global growth for 2020 remains highly uncertain as it relies on improved growth outcomes for stressed economies like Argentina, Iran, and Turkey and for under-performing emerging and developing economies such as Brazil, India, and Mexico.

Following criticisms from others, including the business community, Goyal backtracked on his comment and said that his statement was misinterpreted. The minister had earlier said: "They (Amazon) may have put in a billion dollars but if they make a loss of a billion dollars every year, then jolly well will have to finance that billion dollar. So, it is not as if they are doing a favour to India when they invest a billion dollars," he said at the Raisina Dialogue in New Delhi.

E-commerce companies have to follow Indian rules in letter and spirit and not find loopholes to make a back-door entry into multi-brand retail segment, he said.

On 17 January Goyal clarified that the government welcomed all types of investments in India. However, businesses should adhere to rules and regulations in the country, he cautioned.

Later on the day, Bezos also came out with a statement that Amazon planned to create one million new jobs in India over the next five years through investments in technology, infrastructure and its logistics network.

— With PTI inputs