India to grow at 7.5%: IMF

Singapore/Beijing, May 3

The IMF has retained its growth forecast for India this year at 7.5%, largely driven by private consumption even as weak exports and sluggish credit growth weigh on the economy. It said structural reforms, including GST and in areas like land and labour, will be key to boost India’s economic growth potential going forward.

“India’s growth outlook is favourable, with GDP growth projected to strengthen to 7.5% in the current fiscal year, even in the absence of major structural reforms,” said Ranil Manohara Salgado, chief of Regional Studies Division, Asia and Pacific Department of IMF.

While releasing Regional Economic Outlook for Asia and Pacific in Hong Kong, the IMF said India’s growth momentum is expected to be underpinned by private consumption, which has benefited from lower energy prices and higher real incomes. The IMF called on the policymakers to speed up the structural reform implementation.

The IMF said weak exports and sluggish credit growth (stemming from weaknesses in corporate sector and public sector banks’ balance sheets) will weigh on the economy.

“India has benefitted from lower oil prices and remains the fastest-growing large economy in the world, with GDP expected to increase by 7.5% this year and next,” IMF said. India remains on a strong recovery path, with GDP growth reaching 7.3% in 2015, the Fund said adding that “India’s growth is projected to strengthen to 7.5% in 2016 and 2017.”

An incipient recovery of private investment is expected to help broaden the recovery. Moreover, higher levels of public infrastructure investment and government measures to reignite investment projects should help crowd-in private investment, it said. PTI