IMF projects India to grow by 8% next fiscal

The International Monetary Fund (IMF) today said Indian economy will grow by 6.75 per cent this fiscal and return to its pre-crisis level of 8 per cent next year even if the developed world remains sluggish.

Agriculture is likely to contract by about 1 per cent in 2009-10 due to the drought, the IMF said on the conclusion of the IMF's Executive Board consultations with India on January 25. But non-farm GDP growth is expected to gather momentum.

"Prompt fiscal and monetary easing, combined with the fiscal stimulus already in the pipeline and the return of risk appetite in financial markets, have brought growth close to pre-crisis levels," it said.

"With India's long-term prospects remaining strong and private sector balance sheets sound, we expect growth to be back at potential in 2010-11 even if advanced economies grow below trend," the IMF said.

IMF's rather conservative estimate comes days after the Reserve Bank of India projected 7.5 per cent growth in this fiscal, higher from its earlier estimate of 6 per cent, in its quarterly monetary policy review.

RBI upped its growth projection after the economy grew by a stunning 7.9 per cent in the third quarter of 2009.

The finance ministry's mid-term review of the economy too gave an optimistic projection of 7.75 per cent for the current fiscal.