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India - fastest growing economy



The International Monetary Fund has retained its projection for India’s economic growth in the current financial year at 9.5 per cent. The IMF has maintained India's gross domestic product estimates for next financial year at 8.5 per cent, unchanged from its July projections. Meanwhile, the IMF has cut its China GDP growth projections for 2021 and 2022 by 10 basis points each – to eight and 5.6 per cent, respectively. With this, India will again get the tag of the fastest-growing large economy in the world, both in FY22 and FY23. In 2020, China was the only major economy that had registered growth. While it had grown 2.3 per cent last year, India had contracted by 7.3 per cent. The Fund has also projected India’s consumer price index-based inflation rate to stand at 5.6 per cent during the current financial year from 6.2 per cent last year. For the next financial year, it has forecast a further decline to 4.9 per cent.

Earlier, two other bodies – the monetary policy committee (MPC) of the Reserve Bank of India and Standard and Poor's (S&P) – had retained India's growth projections for FY22 at 9.5 per cent. In its policy review last week, the MPC had also reduced its retail inflation projection for FY22 to 5.3 per cent from its earlier prediction of 5.7 per cent. Also last week, the World Bank (WB) had kept its projection for India’s economic growth in 2021-22 at 8.3 per cent. However, Fitch Ratings had lowered its projection to 8.7 per cent from its earlier forecast of 10 per cent in view of the impact of the second Covid-19 wave in the country. Outside of China and India, emerging and developing Asia has been downgraded slightly, as the pandemic has picked up, the IMF has said. The IMF has also said that the current account balance of India will slip into a deficit of one percent of GDP this financial year, as against a surplus of 0.9 per cent last.