India’s GDP to grow at 7.5 percent in 2019-20: IMF

New York: India is projected to clock an economic growth of 7.5 per cent in the 2019-2020 fiscal year on strengthening of investment and robust private consumption, the IMF said in its latest report.

The International Monetary Fund (IMF), in the report published on Tuesday, said the near-term macroeconomic outlook for India is “broadly favourable”. Growth is forecast to rise to 7.3 per cent in fiscal year 2018/19 and 7.5 per cent in 2019/20 on strengthening investment and robust private consumption, the report said.

Further, while important steps have been taken to improve the recognition of Non-Performing Assets (NPAs) and recapitalise Public Sector Banks (PSBs), more needs to be done.

“A recent large fraud at a PSB highlights financial sector weaknesses and underscores the need for the government to take further steps to improve the PSBs’ governance and operations, including by considering more aggressive disinvestment,” it said.

With demand recovering and rising oil prices, medium-term headline inflation has risen to 4.9 per cent in May 2018, above the mid-point of the Reserve Bank of India (RBI)’s headline inflation target band of about 4 per cent.

Economic risks are tilted to the downside, the report said, adding that on the external side, risks include a further increase in international oil prices, tighter global financial conditions, a retreat from cross-border integration, including spillover risks from a global trade conflict, and rising regional geopolitical tensions.

While noting the broadly positive outlook, the directors observed that risks are tilted to the downside from external factors, such as higher global oil prices and tighter global financial conditions, as well as domestic financial vulnerabilities.