INDIAN ECONOMY ON ‘VERY SOLID TRACK’: IMF CHIEF LAGARDE

WASHINGTON: IMF chief Christine Lagarde has said the Indian economy is on a “very solid track” in the mid-term, days after the International Monetary Fund lowered its growth forecast for the current and the next year.

Describing demonetisation and Goods and Services Tax as a monumental effort, Lagarde said it is hardly surprising there “is a little bit of a short-term slowdown” as a result.

“We have slightly downgraded India; but we believe India is for the medium and long-term on a growth track that is much more solid as a result of the structural reforms that have been conducted in India in the last couple of years,” Lagarde said.

“But for the medium term, we see a very solid track ahead for the Indian economy,” she said.

“We very much hope the combination of fiscal, because the deficit has been reduced, inflation has been down significantly, and the structural reforms will actually deliver the jobs the Indian population, particularly the young people expect,” Lagarde said.

IMF last week lowered India’s growth projection to 6.7% in 2017, 0.5 percentage points less than its previous two forecasts in April and July, attributing it to demonetisation and introduction of the GST.

It also lowered the country’s growth for 2018 to 7.4%, 0.3 percentage points less than its previous two projections in July and April.

India’s growth rate in 2016 was 7.1%, which saw an upward revision of 0.3 percentage points from its April report.