IMF chief Christine Lagarde has said the Indian economy is on a “very solid track” in the mid-term, days after the International Monetary Fund lowered its growth forecast for the current and the next year. Describing the two major recent reforms in India -demonetisation and Goods and Services Tax (GST) – as a monumental effort, Lagarde said it is hardly surprising that there “is a little bit of a short-term slowdown” as a result.
The IMF last week lowered India’s growth projection to 6.7 per cent in 2017, 0.5 percentage points less than its previous two forecasts in April and July, attributing it to demonetisation and introduction of the GST. It also lowered the country’s growth for 2018 to 7.4 per cent, 0.3 percentage points less than its previous two projections in July and April.
India’s growth rate in 2016 was 7.1 per cent, which saw an upward revision of 0.3 percentage points from its April report. “Turning to India…we have slightly downgraded India; but we believe that India is for the medium and long-term on a growth track that is much more solid as a result of the structural reforms that have been conducted in India in the last couple of years,” IMF Managing Director Lagarde said.
“But for the medium term, we see a very solid track ahead for the Indian economy,” she said to a question on India.
“We very much hope that the combination of fiscal, because the deficit has been reduced, inflation has been down significantly, and the structural reforms will actually deliver the jobs that the Indian population, particularly the young Indian people expect in the future,” Lagarde said.