IMF Projects 7.5 Percent Growth Rate for India in 2016-17

The IMF has projected a robust growth rate of 7.3 percent for India this fiscal, picking up to 7.5 percent next year.

The International Monetary Fund has projected a robust growth rate of 7.3 percent for India this fiscal, picking up to 7.5 percent next year. (Photo: iStockPhoto)

The International Monetary Fund has projected a robust growth rate of 7.3 percent for India this fiscal, picking up to 7.5 percent next year.

The multilateral lending agency welcomed recent measures aimed at increasing public infrastructure spending, rationalising subsidies, creating more flexible labour and product markets, as well as enhancing financial inclusion.

India has a very good outlook at the present time. India certainly benefited from low oil and energy prices, one of the world’s largest oil importers and that’s raised the real income of all Indians.

<b>Paul Cashin, India Mission Chief, IMF</b>

The agency’s projections are lower than the government’s estimate of 7.6 percent growth in 2015-16, while the Reserve Bank sees the economy expanding by 7.4 percent this fiscal.

The Indian government has taken some positive policy actions in terms of inflation, subsidies and land and labor market reforms, Cashin added.

As per the IMF’s estimates, growth was the same at 7.3 percent in the fiscal 2014-15.

Cashin, however, cautioned that no country could remain immune from internal or external shocks in these volatile times.

Main internal risk to a country like India comes from a weak corporate and bank balance sheet. There has been a big increase in non-performing loans in the present time, due to the previous shortfall in investment. So that is a concern. We think that that is a moderate concern.

<b>Paul Cashin, India Mission Chief, IMF</b>

In the report, the IMF said the economy is on a recovery path, helped by a large terms of trade gain (about 2.5 percent of GDP), positive policy actions and reduced external vulnerabilities.