Home >politics >policy >India, emerging economies may not return to 8% growth: IMF

Washington: Emerging economies including India may not be able to return to growth rates of 8% and more under present circumstances and neither would it be advisable for them, an International Monetary Fund (IMF) official said.

“The 8% growth...in large part was because of the stimulus many emerging markets gave in order to prevent the major negative spillover from advanced countries," Rupa Duttagupta, deputy chief of the world economic outlook division of the IMF, told reporters at a news conference here.

The IMF, in its latest world economic outlook, projected an average growth rate of about 3.8% in market prices for India in fiscal 2013, which is expected to pick up to 5.1% next year.

India’s gross domestic product growth slowed to 5% in the year ended March 2013 from an average of 8% over the past decade.

“So some of the cooling is just that, which in many ways is welcome because if you continue to pump in...at that rate, obviously, the economy will overheat," Duttagupta said.

Prime minister Manmohan Singh has said the government is committed to getting India back to a sustainable growth path of 8-9%.

Asked if countries such as India can return to days of 8% plus growth rates, Duttagupta said it is neither possible under current circumstances nor advisable. “Whether it is 8% for some countries or it is 10% for China, it is not possible to go there simply because it is also not advisable," Duttagupta said.

The IMF said domestic factors have played a major role in the sharp drop in India’s growth rate.

“We still see investment recovery to be very slow. A lot of supply-side bottlenecks, say constraints in the mining sector, in the power sector, as well as, in general, investment sentiment has been very weak in terms of slow project approvals," Duttagupta said. PTI

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