The present and upcoming financial years are expected to witness a rapid increase in India’s economic growth, according to the IMF (International Monetary Fund). In its recent forecast, the World Economic Outlook, the organisation said that India has consolidated its position as the planet’s quickest-growing major economy.
The Indian economy is expected to record a growth of 7.4% in FY 2018-19. Over the course of the previous financial year, the economy grew by 6.7%, and the IMF has predicted that the growth will be accelerated further come FY 2019-20 to 7.8%. China – the second-fastest growing economy in the world, on the other hand, is expected to slow to 6.6% in FY 2018-19 to 6.4% in FY 2019-20 from 6.9% in FY 2017-18.
The country’s growth rate is expected to show a gradual rise as potential output is set to increase due to structural reforms. The economy is slowly moving on from the trailing effects of demonetisation and the implementation of the Goods and Services Tax, and the IMF believes that the continued introduction of structural reforms over the medium term is set to incentivise private investment while increasing productivity. The RBI (Reserve Bank of India) has also forecast the growth of the Indian economy at 7.4% in FY 2018-19.
According to the IMF, India has shown progress so far as structural reforms are concerned, adding that the implementation of GST will aid in lowering internal trade barriers while enhancing tax compliance and raising efficiency. It also said that recapitalisation is set to enhance the ability of the banking industry to support growth. However, a few more measures might be required for the same. It added that recapitalisation could not only improve PSBs (Public Sector Banks’) governance, but also the debt recovery mechanisms of lenders.
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