IMF sees In­dia growth pick­ing up

The Pak Banker - - COM­PA­NIES/BOSS -

In­dia's eco­nomic growth rate should pick up to 7.5 per­cent in the 2016/17 fis­cal year, the In­ter­na­tional Mon­e­tary Fund said to­day, aided by a col­lapse in oil prices and rel­a­tively low ex­po­sure to cur­rent global fi­nan­cial tur­bu­lence. Sum­ming up its lat­est re­view of Asia's third­largest econ­omy, the Fund fore­casts that eco­nomic growth would pick up from 7.3 per­cent in the 2015/16 fis­cal year that ends on March 31.

"The broad mes­sage is that In­dia's growth tra­jec­tory is pretty strong by in­ter­na­tional stan­dards - not to men­tion the ad­vanced economies," IMF Res­i­dent Rep­re­sen­ta­tive Thomas Richardson told Reuters.

In­fla­tion was be­hav­ing and was on track, the Fund said in a state­ment, with mon­e­tary con­di­tions con­sis­tent with hit­ting the Re­serve Bank of In­dia's tar­get for con­sumer price in­fla­tion of 5 per­cent by March 2017.

And, while the bal­ance of eco­nomic risks has im­proved, they re­main tilted to the down­side. These in­cluded the im­pact of in­ten­si­fied volatil­ity on global fi­nan­cial mar­kets, in­clud­ing from sur­prise un­ex­pected U.S. mon­e­tary pol­icy moves or China's eco­nomic slow­down.

"The author­i­ties have done a pretty good job of bring­ing in­fla­tion down and re­duc­ing ex­ter­nal vul­ner­a­bil­ity, po­si­tion­ing In­dia well to han­dle an­other round of ex­ter­nal volatil­ity," Richardson said in a tele­phone in­ter­view.

In com­ments pub­lished af­ter Fi­nance Min­is­ter Arun Jaitley un­veiled an an­nual bud­get that stuck to deficit tar­gets, the IMF called for more "growth friendly" fis­cal con­sol­i­da­tion.

It also high­lighted po­ten­tial risks from weak cor­po­rate and bank bal­ance sheets. Jaitley's bud­get on Mon­day com­mit­ted $3.7 bil­lion to re­cap­i­talise state banks. Bankers es­ti­mate that their re­cap­i­tal­i­sa­tion needs are nearly 10 times as much.

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