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India set to grow at 6.4 pc in 2015: IMF
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Arun Kumar | 11 Oct, 2014
India is projected to grow at 6.4 percent in 2015 with industrial
production and other indicators turning around thanks to stronger
business confidence since the parliamentary elections, according to the
International Monetary Fund.
"India's growth outlook has improved
since the last national election, helped by lower uncertainty and
improved business confidence," the 188-nation watchdog of global
economic health said in its October 2014 Update of Asia and Pacific
Economic Outlook.
Despite a weaker-than-expected first half of
the year, the outlook for the region remains solid, it said with GDP
forecast to grow by 5.5 percent for the third consecutive year in 2014,
rising slightly to 5.6 percent in 2015.
"In India, growth (based
on GDP at factor cost) has gathered steam as industrial production and
other high-frequency indicators have started to turn around on the back
of stronger business confidence" since the last national elections, IMF
said.
These developments have been accompanied by rising capital
inflows as well as a revival in investment and industrial activity, it
noted.
"India's GDP growth appears to have bottomed out," IMF
said, forecasting its "rise to 5.6 percent in 2014, accelerating further
to 6.4 percent in 2015, despite headwinds from ongoing fiscal
consolidation and a tighter monetary stance".
But "India's high
and persistent inflation remains a policy concern and is projected to
decline only gradually, reaching 7.8 and 7.5 percent in fiscal years
2014 and 2015, respectively," IMF said.
Economic resilience to
global financial risks has increased in the region, especially in India,
where policy actions to reduce vulnerabilities have helped lower
external and domestic imbalances, it said.
In India, for
instance, international reserves have risen and the current account
deficit has been slashed, contributing to a significant reduction in
gross external financing needs, the regional update said.
Suggesting
that reforms to maintain high and sustainable growth will also help
lower near-term vulnerabilities, IMF advocated stronger investment and
efficiency in India as important steps in this direction.
In the
case of India, previous interest rate hikes and other policy measures
are helping contain price pressures, and the full effect of past
monetary tightening is yet to be felt, the update said.
"However,
close vigilance is warranted, particularly in the event of large
cost-push shocks or if there is evidence that inflation expectations
become unmoored," it said.
"India also needs to further remove
structural impediments to investment, including by further liberalizing
its FDI regime and labour market regulations," IMF said.
"Energy sector policies are also needed in India to boost industrial activity," it said.
The
update said the ongoing global recovery, while tepid, should support
Asia's exports. "Meanwhile, favourable financial and labour market
conditions, as well as broadly accommodative policies, will continue to
underpin domestic demand" in the region.
"Policymakers in the
region should capitalise on the outlook to gradually rebuild policy
space and push ahead with structural reforms to deliver sustainable
growth," the IMF suggested.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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66.20
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64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
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78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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