IMF revised the growth projection for India to 7% during the current financial year, compared to the earlier estimate of 6.8%, citing upward revisions to growth last year and improved prospects for private consumption, especially in rural areas. The assessment will provide comfort to analysts and policymakers as rural demand is seen to be weak, although there are initial signs of an uptick.
The World Economic Outlook report has retained the global growth projection at 3.2% for this year, but projected a faster pace of expansion in emerging markets and developing countries driven by India and China, which is projected to grow 5%, compared with 4.6% earlier.
“Growth in India and China is revised upwards and accounts for almost half of global growth. Yet, prospects for the next five years remain weak, largely because of waning momentum in emerging Asia. By 2029, growth in China is projected to moderate to 3.3%, well below its current pace,” it said. While the Indian economy is projected to grow slower than the 8.2% during the last financial year, it will remain the fastest-growing major economy, not just this fiscal year but even in FY26.
IMF’s projections are in line with govt’s estimates but lower than RBI’s revised forecast of 7.2% for the current financial year. Govt may revise its projections when FM Nirmala Sitharaman presents her seventh straight Budget next week.
IMF also warned that momentum in the fight against inflation is slowing, which could further delay an easing of interest rates and keep up strong dollar pressure on developing economies.
ADB retains growth forecast at 7%
A day after IMF revised upward India's growth prospects from 6.8 to 7 per cent, The Asian Development Bank maintained India’s growth forecast at 7% for the current fiscal. Last month, RBI had revised its growth forecast upward to 7.2%, from the 7% estimated earlier. India’s economy is on track to grow by 7% in the fiscal year ending March 31, 2025, as projected in ADO April 2024, said the July edition of the Asian Development Outlook (ADO).
