'IMF growth forcast for India is below its potential growth'

Appreciating measures taken by India to deal with the global financial crisis, the IMF has said the 6.3 per cent growth forcast for the country is considerably below its potential growth.

"For India, we have marked our forecast down to 6.3 per cent of 2009 calendar year. That is considerably below what we consider to be India's potential growth," IMF Deputy Director for Asia Pacific region, Kalpana Kochhar, told PTI.

"There is a specific meaning to "potential"-- it is the rate at which you can grow without causing inflation. And for India we estimate that to be 7.5 per cent to 8 per cent. Our forecast of 6.3 per cent would put it quite a bit below the potential," Kochhar added.

Kochhar was talking in the context of the latest update issued by the Fund on the Global Economic Outlook, which spoke of a deep dive in the economic growth of several advanced countries as well as countries in the Asia Pacific taking a hit on account of the global financial tumult.

She said that measures taken by the Indian government and the RBI to tackle the financial crisis were in right direction.

"In terms of policy measures taken in India so far, I think they have all been in the right direction, the easing of the cash reserve ratio and the statutory liquidity ratio combined with the lowering of interest rates have been in the right direction. It is the direction of providing the market with liquidity. The Reserve Bank of India has announced the facility to provide dollar liquidity and that is also in the right direction," she said.