IMF projects 7.4 pct growth for India in 2018

The International Monetary Fund (IMF) on Monday projected India's growth at 7.4 percent for 2018, as against China's 6.8 percent, making it the fastest growing country among emerging economies.

This announcement comes a day before Prime Minister Narendra Modi's address at the World Economic Forum (WEF) in Davos.

In its latest World Economic Outlook (WEO) update, the IMF has also projected a 7.8 percent growth rate for India in 2019.

Growth rate projections for both 2018 and 2019 remain unchanged since its October 2017 WEO projections.

The IMF said that China, during the same period is expected to grow at 6.6 percent and 6.4 percent respectively.

Emerging and developing Asia will grow at around 6.5 percent over 2018-19, broadly the same pace as in 2017, IMF said, adding that the region continues to account for over half of the growth in the world.

"Growth is expected to moderate gradually in China, though with a slight upward revision to the forecast for 2018 and 2019 relative to the fall forecasts, reflecting stronger external demand, pick up in India, and remain broadly stable in the ASEAN-5 region," the IMF said.

In the year gone by, China (6.8 percent) was ahead of India (6.7 percent), giving China the tag of being the fastest growing emerging economies, as has been the case for major parts of the past several decades.

India was the fastest growing country among emerging economies in 2016.

However, due to demonetisation in late 2016 and implementation of the Goods and Services Tax (GST), India's economy slowed down a little to 6.7 percent.

Further, in 2017, India's growth rate dropped to 6.7 percent.

However, according to IMF Economic Counsellor and Director of Research, Maurice Obstfeld, the two biggest national economies driving current and near-term future growth are predictably headed for slower growth.

"China will both cut back the fiscal stimulus of the last couple of years and, in line with the stated intentions of its authorities, rein in credit growth to strengthen its overextended financial system. Consistent with these plans, the country's ongoing and necessary rebalancing process implies lower future growth," Obstfeld said at a news conference in Davos.

"As for the United States, whatever output impact its tax cut will have on an economy so close to full employment will be paid back partially later in the form of lower growth, as temporary spending incentives (notably for investment) expire and as increasing federal debt takes a toll over time," he added.

Earlier this month, a top IMF official had said that India is reclaiming its place as a growth leader.

"China alone is providing one-third of global growth. Japan has been growing above potential for several quarters," said the IMF First Deputy Managing Director, David Lipton at the Asian Financial Forum in Hong Kong on January 15.

"India is reclaiming its place as a growth leader after a short slowdown. And the ASEAN-5 have gained momentum in response to higher investment and increased exports," Lipton had said.