IMF Forecasts India's Economic Growth At 6.3%, Highlights Potential For Expansion With Reforms

New Delhi, Dec 19 (KNN) The International Monetary Fund (IMF) anticipates India's economic growth at 6.3 per cemt for both the current fiscal year and the next, according to its recent Article IV consultation report released on Monday.

The report, assessing the nation's current and medium-term economic outlook, underscores the crucial role of India's Digital Public Infrastructure (DPI) and robust government programs in sustaining growth.

“India has potential for even higher growth, with greater contributions from labour and human capital, if comprehensive reforms are implemented,” the IMF said.

Despite this optimistic outlook, the IMF's growth projection falls below the Reserve Bank of India's (RBI) forecast of 7 per cent for the current financial year ending on March 31, 2024, as per the report.

Addressing economic concerns, the IMF acknowledged, “Headline inflation is expected to gradually decline to the target although it remains volatile due to food price shocks.”

Addressing economic concerns, the IMF acknowledges the volatility in headline inflation, expected to gradually decline to the target, driven partly by food price shocks.

In November, volatile food prices raised retail inflation to 5.55 per cent, up from 4.87 per cent the previous month, while within the RBI's tolerance band of 2-6 per cent, but still exceeding the 4 per cent target.

The IMF report highlights the Indian government's commitment to maintaining a 4.5 per cent fiscal deficit target.

"The adjustment will be implemented approximately evenly over 2024-25 and 2025-26. State government deficits are expected to remain below the 3 per cent of GDP ceiling, in line with their historical performance," the IMF added.

However, the IMF suggested that India's elevated public debt necessitates additional fiscal measures.

The recommendations made by the IMF include further Goods and Services Tax (GST) and subsidy reforms, with a continued emphasis on public investment and targeted support for vulnerable populations.

(KNN Bureau)