New Delhi: Sounding bullish about India, International Monetary Fund (IMF) expects country’s economic growth to move up to 5.5 per cent in the current fiscal and 6.25 per cent in the next fiscal.
“Our sense is that the growth will pick up this year–5.5 per cent this year going up to 6.25 per cent next year and rising to just below 7 per cent may be over the medium term or little bit higher if things go well,” IMF senior resident representative Thomas J Richardson said at an event here.
“So we are pretty optimistic about growth over the medium term…we are bullish about India over the medium term given the favourable demographics you have got,” he said.
Asked about risk factor to growth projection for the current fiscal, he said, there are some risks and that would have some impact on India as well but broadly risks are neutral at this point.
Indian economy is expected to grow at decade low of 4.9 per cent in 2013-14.
He said that moderating inflation will be very helpful to setting the stage for strong growth.
“Bringing inflation down is really important. Both Finance Ministry and central bank are doing a great job in controlling inflation,” he told reporters here.
When asked about priorities for the new government to revive economic growth, Richardson said, “bringing the fiscal deficit down, broadening tax base. Those things also contribute to improve the business environment and making India a great place to invest.”
He further said that introduction of Goods and Services Tax (GST) will improve India’s growth prospects because it will remove trade barriers.
“Budget deficit in India is on a higher side … bring down fiscal deficit and subsidies. Fuel subsidies are actually regressive,” he added.
He was here for an Assocham function on ‘Immediate priorities for the new finance minister to achieve economic security of India’.
Speaking at the event, Assocham President Rana Kapoor said that the Indian economy is not in a healthy state and the new government would have to take “bold decisions” within 35 days to boost economic growth.
“Lack of decision making and business regulations have impacted growth. We need sectoral legislations,” Kapoor said.
Sharing similar views, ICRIER Director Rajat Kathuria said decline in investments have led to slowdown in growth rate.
“Corruption is not there in the minds of investors. Inadequate physical infrastructure and delay in decision making are the two main reasons for low growth,” he said.