IMF cuts India's growth projection to 3.75% in 2013

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IMF cuts India's growth projection to 3.75% in 2013
The International Monetary Fund (IMF) lowered its projection of India's growth rate to 3.75 per cent in 2013 from 5.7 per cent estimated earlier on account of poor demand and weak manufacturing and services sector performance, reported PTI.

The IMF, in its latest World Economic Outlook report, also said India is among the economies that may require more tightening to address inflation pressure.

"In India, growth in fiscal year 2013 is expected to be around 3.75 per cent, with strong agriculture production offset by lacklustre activity in manufacturing and services, and monetary tightening adversely affecting domestic demand," the IMF said.

"For fiscal year 2014, growth is projected to accelerate somewhat to 5 per cent, helped by an easing of supply bottlenecks and strengthening of exports," according to the report released on the sidelines of the IMF and World Bank meetings.

In terms of GDP at factor cost, India's growth is estimated to be 5 per cent in fiscal year 2012, at 4.25 per cent in 2013 and at about 5 per cent in 2014, it noted in the latest report. In 2012, India's growth rate was 3.2 per cent, while in 2011 it was 6.3 per cent.

According to the IMF report, in India and Brazil, infrastructure and regulatory bottlenecks slowed output supply in the face of still-strong domestic demand. As a result, external pressures have grown in these economies, it said.

In economies, including India, Brazil and Indonesia, more tightening may be needed to address continued inflation pressure from capacity constraints, which will likely be reinforced by recent currency depreciation, the report said.

Dion Global Solutions Ltd.

Read more about: imf, gdp, economic growth, manufacturing
Story first published: Wednesday, October 9, 2013, 9:20 [IST]
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