IMF projects 11.5% growth rate for India in 2021 fiscal

The International Monetary Fund in its latest World Economic Outlook Update has released a projected 11.5 per cent growth rate for the Indian economy during 2021-22 fiscal thereby reflecting a resounding recovery for the economy. This is estimated to have contracted by eight per cent in 2020 due to the pandemic. In its estimates, the IMF projected the country, the only major economy of the world, to register a double-digit growth amidst the coronavirus pandemic.

India is followed by China with 8.1 per cent growth in 2021, followed by Spain (5.9 per cent) and France (5.5 per cent). Revising its figures, the IMF said that in 2020, the Indian economy is estimated to have contracted by 8 per cent. China is the only major country which registered a positive growth rate of 2.3 per cent in 2020. In the case of India, the IMF said that the country is projected to grow by 6.8 per cent in 2022 and that of China by 5.6 per cent. With the latest projections, India regains the tag of the fastest developing economies of the world. IMF chief economist, Gita Gopinath, said, "Cumulatively by the end of 2022, India is still 9 per cent below its pre-pandemic projected level. We are seeing India come back to its 2019 levels and 2021, but it's still below. Why do we have these upgrades (in IMF's growth projections for India), because the activity and mobility particularly came back much faster than expected in India. We have not seen another wave."

"In fact, we are seeing a very strong decline in cases, which is again a bit different from other parts of the world. These factors, including what we're seeing in terms of high-frequency indicators, point to have a somewhat faster pace of recovery. But again, there is still some distance to go," she added.

Commending the steps being taken by the Indian government on the monetary policy and the fiscal policy side, she said it is actually slightly above the average for emerging markets. "Emerging markets on average have provided six per cent of GDP. In India, this is slightly above that. Good for India is that there is still space to do more." The IMF is impressed by the appetite for structural reforms that India is retaining.

Earlier, RBI, in its 'state of the economy' report, had predicted a V-Shape recovery of the Indian economy and had informed that if the growth momentum continues and inflation stays benign there would be room for policy easing.