IBEF, New Delhi: India's growth projection has been revised upwards by the International Monetary Fund (IMF) to 9.7 per cent for 2010, from the earlier estimate of 9.4 per cent. It is the third straight revision of IMF's growth projections for India.
The economy was projected to expand by 8.8 per cent, earlier. IMF's projection for India is the highest among those made by several agencies. The government and Reserve Bank of India (RBI) have estimated gross domestic product (GDP) growth at around 8.5 per cent for 2010-11.
RBI pointed out in its latest Macroeconomic and Monetary Developments Report that IMF's growth projections were for GDP at market prices, which includes the trend in indirect taxes net of subsidies.
The upward trend in indirect tax collections has continued. According to the latest data released by the Ministry of Finance, April-August 2010 witnessed the increase in these taxes by approximately 46 per cent to over US$ 28.05 billion.
While the IMF's World Economic Outlook report does not spell out its methodology, the agency's estimates put India’s growth estimates next only to China. It has said the India growth story was led increasingly by domestic demand. "Robust corporate profits and favourable external financing will encourage investment," it said. The report further added that low reliance on exports, accommodative policies and strong capital inflows have supported domestic activity and growth.
Also, IMF listed India among economies that are growing above potential. Among the policy prescriptions, the report listed out fiscal consolidation as a priority area.
Furthermore, IMF expects the recovery to continue and the world economy is projected to expand by 4.8 per cent, compared with 4.6 per cent estimated earlier. For 2011, the projection has been retained at 4.2 per cent, with Asia leading the recovery.
Posts
