International Monetary Fund (IMF) lowered India’s Economic Growth Forecast to 6.9% in 2012

The International Monetary Fund (IMF) in its World Economic Outlook (WEO), released ahead of the IMF-World Bank Spring Meetings, marginally lowered India’s economic growth forecast to 6.9% in 2012, from 7% projected earlier. The IMF projected world economic growth rate to slump to 3.5% in 2012 from 3.9% in 2011. It pegged India’s growth during the 2013 calendar year at 7.3%.

The WEO pointed out that in emerging Asia, including India, strengthening domestic demand will require improving the conditions for private investment by addressing infrastructure bottlenecks and enhancing governance and public service delivery. The WEO while referring to the declining growth rate stated that domestic factors also contributed to the slowdown, as deterioration in business sentiment weakened investment and policy tightening raised borrowing costs.

According to the estimates of India’s Central Statistical Organisation (CSO), the growth rate during the financial year 2011-12 slipped to a 3-year low of 6.9%. The Union government projected a growth rate of 7.6% for 2012-13 fiscal year. The Reserve Bank of India however expects it to be 7.3%.

The WEO highlighted that fiscal consolidation would continue to remain a priority in India, to anchor confidence and rebuild room to meet future challenges.