The International Monetary Fund has projected India’s growth rate of 7.3 per cent during the current year and 7.4 per cent in 2019 which matches the forecast by the Reserve Bank of India during its recent monetary policy review. The growth rate in 2017 was 6.7 per cent.
"India's growth is expected to increase to 7.3 per cent in 2018 and to 7.4 per cent in 2019 (slightly lower than in the April 2018 World Economic Outlook [WEO] for 2019, given the recent increase in oil prices and the tightening of global financial conditions), up from 6.7 per cent in 2017," the IMF has said in its World Economic Outlook report released in Bali as part of the IMF and World Bank annual meeting.
This acceleration reflected a “rebound from transitory shocks” (the cash ban and implementation of the national Goods and Services Tax), with strengthening investment and robust private consumption, the report says.
As per the projections, India is slightly ahead of China this year and should be more than 1 per cent ahead of China next year.
The International Monetary Fund has cut its global growth forecasts as trade tensions between the U.S. and trading partners have started to hit economic activity worldwide. On the global front, the report says economy was expected to grow at 3.7 per cent this year and next year down by 0.2 percentage points from an earlier forecast.
The cut its global growth forecasts has been attributed to trade tensions between the US and trading partners. All these had started hitting economic activity across the globe.China’s growth is projected to moderate from 6.9 per cent in 2017 to 6.6 per cent in 2018 and 6.2 per cent in 2019. This reflected a slowing of external demand growth and necessary financial regulatory tightening, the report said.
The IMF expected the current account deficit in India to be down to 3 per cent of the GDP in the current fiscal year before improving to 2.5 per cent next fiscal.
In the wake of rising fuel prices, inflation is estimated at 3.6 per cent this fiscal year and projected to be 4.7 next fiscal. Renewed impetus to reform labour and land markets, along with further improvements to the business climate were ‘crucial’, for India, the report said.
A high interest burden and risks from rising yields called for continued focus on debt reduction to establish policy credibility and build buffers. "These efforts should be supported by further reductions in subsidies and enhanced compliance with the Goods and Services Tax," the report said.
Reviving bank credit and enhancing the efficiency of credit provision by accelerating the cleanup of bank and corporate balance sheets and improving the governance of public sector banks, should be the priorities of reform. UNI