IMF Hails PM Modi-Implemented Reforms, Projects India As World's Fastest Growing Economy

| October 9 , 2018 , 08:54 IST

Prime Minister Narendra Modi-led reforms in India have been widely criticised by Opposition parties, but the International Monetary Fund (IMF) on Tuesday hailed the economic reforms carried out under PM Modi. The IMF also projected India to be the world`s fastest growing major economy this year and next.

According to the World Economic Outlook (WEO) released ahead of the IMF annual meeting in Bali, "In India, important reforms have been implemented in recent years, including the Goods and Services Tax, the inflation-targeting framework, the Insolvency and Bankruptcy Code, and steps to liberalize foreign investment and make it easier to do business."

However, citing external factors such as "the recent increase in oil prices and the tightening of global financial conditions", the IMF cut India`s growth projection made in July for next year by 0.1 per cent to 7.4 per cent. Despite the projection cut, it would still be the world`s fastest growth rate for major economies.

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In an improvement from India's growth rate of 6.7 percent in 2016, the growth projections for this year and the next year reflect "a rebound from transitory shocks" of demonetisation and the implementation of the national Goods and Services Tax" and "strengthening investment and robust private consumption," the WEO report said.

The IMF predicts India's growth rate improving beyond 2019 "owing to structural reforms and a still-favourable demographic dividend."

For the next fastest-growing major economy of China, the IMF said that it was lowering the growth projections for it made in April by 0.2 per cent to 6.2 per cent "given the latest round of US tariffs on Chinese imports."

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Regarding the overall global economy, the IMF slashed the growth projections made in July for this year and the next by 0.2 per cent to 3.7 per cent, as IMF Chief Economist Maurice Obstfeld warned that "there are clouds on the horizon" and "the likelihood of further negative shocks to our growth forecast has risen."

He added, "in several key economies, moreover, growth is being supported by policies that seem unsustainable over the long term."

The IMF Chief Economist cited uncertainties in trade as a result of US President Donald Trump's policies and the tightening of financial markets in developing countries as factors for increasing risks to global growth.