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IMF’s update

Photo: ReutersPremium
Photo: Reuters

For 2022-23, the IMF has raised India’s projected growth from 6.9% in its last update, back in April, to 8.5% now. This points to a more elongated revival from the covid blow than seen before our second wave

In the latest update of its World Economic Outlook, the International Monetary Fund (IMF) has slashed its forecast for India’s growth in 2021-22 by a chunky 3 percentage points to 9.5%, aligning it with Reserve Bank of India’s current projection. On an output base that contracted nearly 8% as a consequence of covid in 2020-21, that would take our economy’s real size just above what it was in 2019-20. So, while our national income is expected to grow faster than the world’s IMF-estimated 6% in 2021 after last year’s shrinkage of 3.3%, we don’t have much reason to cheer that figure. The big question is whether we can sustain robust growth once the pandemic is behind us.

For 2022-23, the IMF has raised India’s projected growth from 6.9% in its last update, back in April, to 8.5% now. This points to a more elongated revival from the covid blow than seen before our second wave. Catching up with the pre-pandemic path of our economy’s emergence would still be a big challenge, particularly if overall demand remains too weak to attract sufficient job-generating investments. Our policymakers must devise a coherent strategy to enhance growth. Reforms often take years to fructify.

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