Owing to the impact of the demonetisation drive which was rolled out by the Prime Minister Narendra Modi led-government on November 9 2016, the International Monetary Fund (IMF) on Tuesday trimmed India's annual growth forecast by 0.4 percentage points to 7.2 per cent for 2017.
The findings were published in the IMF's annual World Economic Outlook (WEO).
The temporary negative consumption shock induced by cash shortages and payment disruptions from the recent currency exchange initiative resulted in a modification of the forecasted rate from 7.6 to 7.2 percent.
By 2022, the IMF estimates global growth to rise to 3.8 per cent, led by developments in the emerging market and developing economies, where growth is projected to increase to five per cent by the end of the forecast period
"This forecast assumes continued strengthening of growth in commodity exporters; an acceleration of activity in India resulting from the implementation of important structural reforms; and a successful rebalancing of China's economy to lower, but still high, trend growth rates," said the report.
However, the IMF has also listed further reforms that India must undertake, including replacing the demonetised currency and reducing labour and product market rigidities to ease firm entry and exit, expand the manufacturing base, and gainfully employ the abundant pool of labor.
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