INDIA is projected to grow at 7.3 per cent in 2019 and 7.5 per cent in 2020, supported by the continued recovery of investment and robust consumption, thus remaining the fastest growing major economy of the world, according to the IMF. In 2018, India’s growth rate was 7.1 per cent, as against China’s 6.6 per cent. In 2019, the International Monetary Fund (IMF) projected a growth rate of 6.3 per cent for China and 6.1 per cent in 2020, according to the latest World Economic Outlook projections released ahead of the annual spring meetings of the International Monetary Fund and the World Bank.
“In India, growth is projected to pick up to 7.3 per cent in 2019 and 7.5 per cent in 2020, supported by the continued recovery of investment and robust consumption amid a more expansionary stance of monetary policy and some expected impetus from fiscal policy,” the report said. “Nevertheless, reflecting the recent revision to the national account statistics that indicated somewhat softer underlying momentum, growth forecast have been revised downward compared with the October 2018 WEO by 0.1 percentage point for 2019 and 0.2 percentage point for 2020, respectively,” it said. Growth in India, the report said, is expected to stabilise at just under 7¾ per cent over the medium term, based on continued implementation of structural reforms and easing of infrastructure bottlenecks.
‘The World Economic Outlook’ believes that in India, continued implementation of structural and financial sector reforms with efforts to reduce public debt remain essential to secure the economy’s growth prospects. “In the near term, continued fiscal consolidation is needed to bring down India’s elevated public debt. This should be supported by strengthening goods and services tax compliance and further reducing subsidies,” it said. Important steps have been taken to strengthen financial sector balance sheets, including through accelerated resolution of non-performing assets under a simplified bankruptcy framework, it noted.
“These efforts should be reinforced by enhancing governance of public sector banks. Reforms to hiring and dismissal regulations would help incentivise job creation and absorb the country’s large demographic dividend; efforts should also be enhanced on land reform to facilitate and expedite infrastructure development,” the report said. Gita Gopinath describes current economic atmosphere as ‘a delicate moment’: DESCRIBING current global economic atmosphere as “a delicate moment”, IMF chief economist Gita Gopinath on Tuesday said that while the global economy continues to grow at a reasonable rate and a global recession is not in the baseline projections, there are many downside risks. Beyond 2020, global growth is expected to stabilise at around 3½ per cent, bolstered mainly by growth in China and India and their increasing weights in world income, she said in a blog post ahead of the annual spring meeting of the IMF.