India’s economic growth has been projected and moderately scaled down to 7.3% from 7.4% by the International Monetary Fund (IMF). IMF has also suggested that India should take more economic reforms including hire and fire in order to create jobs.
However, the projections by IMF are much more optimistic than the Reserve Bank of India’s (RBI) predictions which were more optimistic than the World Bank’s predictions.
India’s economic growth will, however, remain more than its nearest competitor China as it has been predicted at 6.6 %, 6.3% and 6.1% for 2018, 2019 and 2020 respectively. A downfall in 0.1% has been noticed each year for China.
The IMF has said in the WEO, titled, ‘Growth Slowdown, Precarious Recover’ that, “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.”
Adding that, “Nevertheless, reflecting the recent revision to the national account statistics that indicated somewhat softer underlying momentum, growth forecasts have been revised downward compared with the October 2018 WEO by 0.1 percentage point for 2019 (2018-19) and 0.2 percentage point for 2020 (2020-21), respectively.”
Due to the demonetisation act in 2016-17 and 2017-18 economic growth of India was said to slow down 7%. I the IMF’s projections come true, India’s hope to grow 8% would crash down. According to the IFM, Indian economic growth is expected to become stable at 7.7.5% around the medium term based on the continued implementation of reformed structures to easing of unexpected charges and new policies under the umbrella of infrastructure.
As per IFM, Reforms to reduce public debt will also secure the economy’s growth. But to bring down India’s elevated public debt, fiscal consolidation is needed.
“This should be supported by strengthening goods and services tax compliance and further reducing subsidies. Important steps have been taken to strengthen financial sector balance sheets, including through accelerated resolution of nonperforming assets under a simplified bankruptcy framework,” it said.
Gita Gopinath, a chief economist at IMF, told a leading daily that, “beyond 2020, global growth is expected to stabilize around 3.5 per cent, bolstered by growth in China and India.”