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7.8% in 2019: IMF keeps projection for India unchanged from its Jan outlook

China is expected to grow respectively at 6.6% and 6.4% in the two years

Press Trust of India  |  Washington 

International Monetary Fund, IMF

India is expected to grow at 7.4 per cent in 2018 and 7.8 per cent in 2019, leaving its nearest rival behind respectively at 6.6 and 6.4 per cent in the two years, the said on Tuesday.

With growth picking up after falling sharply in the second quarter of 2017 due to "one-off factors", India in 2018 and 2019 would re-emerge as one of the fastest growing major economies, it said.

The (IMF) in the latest (WEO) has projected India to grow at 7.4 per cent in 2018 and 7.8 per cent in 2019.

is expected to grow respectively at 6.6 and 6.4 per cent in the two years.

However, the latest growth rate projection remains unchanged since the last one in October.

India's growth rate in 2016 was 7.1 per cent as against China's 6.7 per cent. Two major economic reforms demonetisation and (GST) resulted in a slight lower growth rate of 6.7 per cent in 2017.

with 6.9 per cent growth jumped marginally ahead of India in 2017.

India's projected growth provide some offset to China's gradual slowdown, the said.

The latest forecast is unchanged, "with the short-term firming of growth driven by a recovery from the transitory effects of the currency exchange initiative and implementation of the national goods and services tax, and supported by strong private consumption growth," the said.

According to the IMF, India has made progress on structural reforms in the recent past, including through the implementation of the GST, which will help reduce internal barriers to trade, increase efficiency, and improve tax compliance.

"While the medium-term growth outlook for India is strong, an important challenge is to enhance inclusiveness," the report said.

India's high public debt and recent failure to achieve the budget's deficit target call for continued fiscal consolidation into the medium term to further strengthen fiscal policy credibility, the report said.

The main priorities for lifting constraints on job creation and ensuring that the demographic dividend is not wasted are to ease labour market rigidities, reduce infrastructure bottlenecks, and improve educational outcomes, the said.

According to the WEO, growth in and India last year was supported by resurgent net exports and strong private consumption, respectively, while investment growth slowed.

Referring to the projected growth rate for India in 2018 and 2019, which is higher than that of the previous year of 2017, the explained this is due to the strong private consumption as well as fading transitory effects of the currency exchange initiative and implementation of the national

"Over the medium term, growth is expected to gradually rise with continued implementation of structural reforms that raise productivity and incentivise private investment," the said.

"The growth rate in is projected to soften down during this period," it said, adding that over the medium term, its economy is projected to continue re-balancing away from investment toward private consumption and from industry to services, but nonfinancial debt is expected to continue rising as a share of GDP, and the accumulation of vulnerabilities clouds the medium-term outlook.
 

First Published: Tue, April 17 2018. 18:56 IST
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