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India In Focus - INDIAN ECONOMY: OVERVIEW, GROWTH and DEVELOPMENT - After ADB and RBI, now IMF cuts India's growth forecast.

The International Monetary Fund (IMF) has cut India's growth forecast for the current fiscal, following similar action by the Asian Development Bank (ADB) and the Reserve Bank of India (RBI).

"In India, growth is projected to pick up to 7.3percent in 2019 (2019-20) and 7.5percent in 2020, supported by the continued recovery of investment and robust consumption amid a more expansionary stance of monetary policy and some expected impetus from fiscal policy," IMF said in its World Economic Outlook (WEO) report released on Tuesday.

IMF's downward revisions in India's growth forecasts are 20 basis points (bps) each in 2019-20 and 2020-21 from its outlook released in January.

Both ADB and the RBI last week cut their 2019-20 growth projection for India to 7.2percent from 7.4percent earlier, blaming rising risks to global economic growth as well as weakening domestic investment activity.

The Indian economy grew 6.6percent in the December quarter, the slowest in five quarters. That prompted the Central Statistics Office to trim its 2018-19 forecast to 7percent in February from 7.2percent estimated in the previous month.

With the Indian economy projected to slow down further in the fiscal fourth quarter, the central bank's focus has shifted from inflationary concerns to sustaining the growth momentum.

RBI effected two back-to-back rate cuts by 25bps each to boost growth.

Of the high-frequency indicators of industry, growth in the manufacturing component of the index of industrial production (IIP) slowed to 1.3percent in January.

The growth of eight core industries remained sluggish in February at 2.1percent. Data released by Society of Indian Automobiles Manufacturers (Siam) on Monday signalled a slowdown in urban demand as car sales grew 2.4percent in 2018-19, the worst performance in 14 years.

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Publication:Pakistan & Gulf Economist
Geographic Code:9INDI
Date:Apr 21, 2019
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