International Monetary Fund in its latest release on 16 April 2013 of the World Economic Outlook (WEO) slashed the growth projection of India from its earlier prediction of 5.9 percent to 5.7 percent for the calendar year 2013.
The IMF slashed its projection for India based on the significant structural challenges faced by India, which would lower down the potential output keeping inflation elevated by regional reasons. It also predicted that the bottomed out India economy could recover following the policy reforms introduced by the Union Government and the improvement in external demands. All these depend upon a better monsoon season, solid consumption, external demand and improvement in policy making.
IMF also slashed the global outlook to 3.3 percent from 3.5 percent predicted in January 2013 and for 17-nation Euro Zone, the forecast was 0.3 percent. It has advocated to the policymakers of European nations to come up with aggressive monetary policies to pull out Eurozone from the crisis situation.
Growth Projection by Union Government of India
The Union Government projected its growth for the fiscal year 2013-14 to be 6.2-6.7 percent. Indian Government uses the factor of cost method for making growth projections related to economy. Whereas IMF calculates the growth rate based on the estimates of Growth Domestic Product using market prices.
The Current Account Deficit would be elevated at 4.9 percent against 5.1 percent in 2013, and the Consumer Price Inflation can move up to 10.8 percent from 9.3 percent. The latest data released in context of India’s retail inflation showed moderated impact of retail inflation in March 2013.
IMF projected that India would grow at the rate of 6.2% in 2014. It projects the global economy to expand 4.1% in the 2014.
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