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India set to grow at 7.5 percent in 2016: IMF
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Arun Kumar | 07 Oct, 2015
Growing faster than other major emerging market economies, India's
growth is expected to strengthen from 7.3 percent this year and last
year to 7.5 percent next year, according to the International Monetary
Fund (IMF).
"Growth will benefit from recent policy reforms, a
consequent pickup in investment, and lower commodity prices," the IMF
said in latest World Economic Outlook (WEO) released Tuesday ahead of
the World Bank-IMF annual meetings in Lima (Peru).
The WEO
foresees lower global growth compared to last year, with modest pickup
in advanced economies and a slowing in emerging markets, primarily
reflecting weakness in some large emerging economies and oil exporting
countries.
Global real GDP grew at 3.4 percent last year, and is
forecast to grow at only 3.1 percent this year. Growth is expected to
rebound to 3.6 percent next year and increase beyond 2016.
One of
the key factors in this is the gradual increase in the global weight of
fast-growing countries such as China and India, which further increases
their importance as drivers of global growth, the WEO said.
In
India, near-term growth prospects remain favourable, and the decrease in
the current account deficit has lowered external vulnerabilities, it
said.
Inflation is expected to decline further in 2015, reflecting the fall in global oil and agricultural commodity prices.
The
faster-than expected decline in inflation has created space for
considering modest cuts in the nominal policy rate, IMF said.
But
the real policy rate needs to remain tight for inflation to decline to
the inflation target in the medium term, given upside risks to
inflation, it said.
Continued fiscal consolidation is also
essential, but it should be more growth friendly, WEO said suggesting
tax reform and reduction in subsidies.
With balance sheet strains
in the corporate and banking sectors, financial sector regulation
should be enhanced, provisioning increased, and debt recovery
strengthened, it suggested.
Structural reforms should focus on relaxing long-standing supply constraints in the energy, mining, and power sectors, WEO said.
Priorities
include market-based pricing of natural resources to boost investment,
addressing delays in the implementation of infrastructure projects, and
improving policy frameworks in the power and mining sectors.
In
advanced economies, growth is expected to remain robust and above trend
through 2016 and contribute to narrowing the output gap.
The
growth recovery in the euro area is projected to be broad-based. Growth
prospects in emerging markets and developing economies vary across
countries and regions.
But the outlook in 2015 is generally
weakening, with growth for these economies as a group projected to
decline from 4.6 percent in 2014 to 4 percent in 2015.
The WEO
underscores that raising actual and potential output must remain the
policy priority. This will require a combination of demand support and
structural reforms, it said.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
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64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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