Cautioning that governance concerns have weakened business sentiment in the country, the IMF today lowered India’s growth projection to 6.9 percent for 2012.
The International Monetary Fund (IMF) in January pegged Indian economic growth to expand 7 percent for this year. “In India, the lowered growth outlook in 2012 owes much to a slowdown of investment which partly reflects structural factors,” the multilateral agency said.IMF called for renewed efforts to revive the “flagging” structural reform agenda.
MF also called for steps to improve investment climate, remove infrastructure bottlenecks and expand education opportunities, thereby boosting reforms. Reuters
Apart from some financial reforms and measures to broaden the use of public-private partnerships announced in the 2012-13 budget, the implementation of reforms related to infrastructure is likely to proceed slowly, it noted.
IMF’s Asia-Pacific Regional Economic Outlook released today also pointed out that domestic factors too have played a role in India’s growth slowdown over the second half of 2011. “Concerns about governance and slow project approvals by the government have weakened business sentiment, which in turn has adversely affected investment, along with cyclical factors such as global uncertainty and policy tightening…,” said the IMF .
However, the multilateral agency has retained India’s growth estimate at 7.3 percent for 2013. As per the IMF, the national economy grew by 7.1 percent last year. IMF also called for steps to improve investment climate, remove infrastructure bottlenecks and expand education opportunities, thereby boosting reforms.
On price rise, the multilateral agency stressed that fiscal consolidation is the key to containing inflationary pressures and creating space for priority development needs. Headline inflation declined to 6.89 per cent in March, from 6.95 percent in February.
“Consolidation efforts should focus on limiting non-priority spending, including fuel-related subsidies, while providing more room for public investment and health and education,” the report said.
PTI
