Indian economy to grow 8.2pc in 2011, says IMF
The International Monetary Fund (IMF) on Friday projected the Indian economy will expand by 8.2 per cent in 2011, unchanged from its growth forecast made in April.
However, this is much lower than 10.4 per cent growth witnessed in 2010, it said.
The multilateral lender's latest projection comes at a time when the country is grappling with uncomfortably high inflation that threatens to derail its growth story.
Inflation in India, which is the second fastest economy after China, crossed nine per cent mark in May.
IMF expects India to expand at a much slower pace at 7.8 per cent in 2012, according to the World Economic Outlook report released today.
The multilateral lender had earlier in April estimated that the Indian economy will expand by 8.2 per cent and 7.8 per cent in 2011 and 2012, respectively.
While it has retained its estimates, Indian government has expressed concerns that GDP expansion during April 2011- -March 2012 may moderate from its February projection of around 9 per cent growth.
It today said that tight monetary policy regime by the RBI to tackle inflationary pressures, is expected to hurt its economic growth.
"The monetary policy has been gradually tightened... Monetary measures may end up moderating the growth if they have to be persisted for an extended period of time," Finance Minister Pranab Mukherjee said in New Delhi.
Meanwhile, in a separate report, IMF cautioned against likely "spending overruns" in India.
"...Spending overruns seem likely in India, based on rapid growth in fuel and food subsidies during the past few quarters... consistent with these observations, projections for the 2012 deficit have been revised upward compared with the April 2011 Fiscal Monitor", it said.
India's fiscal deficit is projected to fall gradually in the coming years, but will still remain high, it added.
The country's fiscal deficit is pegged at 4.6 of GDP for the fiscal 2011-12.
"Its debt ratio will decline moderately, mainly due to rapid output growth," the multilateral agency added.
IMF pointed out that fiscal consolidation should continue at a faster pace in some emerging markets.
"In many emerging economies, fiscal consolidation is proceeding at an appropriate pace. In others, fiscal policy needs to be tightened faster than currently envisaged, to reduce overheating risks," it noted.
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