The International Monetary Fund (IMF) has retained India's economic growth projections at 7.2 per cent in 2017-18, up slightly from 7.1 per cent in the previous year. However, the growth would accelerate to 7.7 per cent in 2018-19, IMF said while also maintaining the growth rate level projected in April.
India's economic growth slowed down to 7.1 per cent in 2016-17, sharply lower than 8 per cent in the previous year due to the effect of demonetisation.
The growth rate clocked in 2015-16 will not be achieved even in 2018-19, according to projections made by the IMF in its overview of the World Economic Outlook.
The growth in 2016-17 would have been lower had the government not intervened in terms of capital expenditure.
"While activity slowed following the currency exchange initiative, growth for 2016 at 7.1 per cent was higher than anticipated due to strong government spending and data revisions that show stronger momentum in the first part of the year," says IMF.
Growth in India is forecast to pick up further in 2017 and 2018 in line with the April forecast, the international organisation said.
Despite China's growth projections being raised by a couple of notches, India's economy would still be the fastest growing among large economies. China's economy is projected to grow by 6.7 per cent in 2017, up 0.1 percentage points from the April forecast, and 6.4 per cent in 2018, up by 0.2 percentage points from earlier forecasts by the IMF.
As such, while India's economy is projected to grow in both 2017-18 and 2018-19, China's economy will expand at the same rate in 2017 – at 6.7 per cent – as it did in 2016. The growth rate in China is projected to be slower in 2018.
IMF has also maintained the same global economic growth rate at 3.5 per cent in 2017 and 3.6 per cent in 2018.
The unchanged global growth projections mask somewhat different contributions at the country level.
US growth projections are lower than in April, primarily reflecting the assumption that fiscal policy will be less expansionary going forward than previously anticipated.
Growth has been revised up for Japan and especially the Euro area, where positive surprises in activity in late 2016 and early 2017 point to solid momentum.