India’s GDP Growth to Weaken to Slowest Pace in Decade: IMF
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The International Monetary Fund has lowered India’s growth forecast to 4.9 percent this year, its lowest pace in a decade, amid weak investment growth and a worsening global economic outlook.
One of the first major institutions to peg India’s growth below 5 percent, the International Monetary Fund said in its World Economic Outlook report today that “the outlook for India is unusually uncertain”.
The International Monetary Fund has lowered India’s growth forecast to 4.9 percent this year, its lowest pace in a decade, amid weak investment growth and a worsening global economic outlook.
One of the first major institutions to peg India’s growth below 5 percent, the International Monetary Fund said in its World Economic Outlook report today that “the outlook for India is unusually uncertain”.
Although India recorded growth of 6.8 percent in 2011, it has dipped more recently to around 5.5 percent, its lowest pace in three years.
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Investor confidence has been particularly undermined by a series of corruption scandals, retroactive tax measures and nationwide blackouts in the summer, which highlighted concerns about creaking infrastructure.
Citing “an expectation that current drags on business sentiment and investment will persist”, the IMF said:
[quote] In India, there is an urgent need to reaccelerate infrastructure investment, especially in the energy sector, and to launch a new set of structural reforms, with a view to boosting business investment and removing supply bottlenecks. Structural reforms also includes tax and spending reforms, in particular reducing or eliminating subsidies, while protecting the poor. [/quote]
However, the Washington-based lender also said the “the recent announcements with respect to easing restrictions on foreign direct investment in some sectors, privatizations, and lowering fuel subsidies are very welcome.”
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India’s government began the policy overhaul last month to boost the economy and avert a credit-rating downgrade, snapping months of political gridlock.
The steps to curb expenditure on subsidies, contain a fiscal deficit and permit more investment from abroad triggered a surge in the rupee and buoyed stocks, reported Bloomberg.
Commenting on the report, India’s finance minister P Chidambaram said the government is willing to initiate further economic remedies based on the feedback.
Delivering a grim warning that India’s economy will tank if it is not bolstered by further intervention, he vowed that the pace of reforms will remain “strong and unabated”.
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