New Delhi:

Amidst a slowing global economy on the back rising trade tensions, the International Monetary Fund (IMF) has upgraded India’s growth forecast for the financial year 2019-20 by 10 basis points since its October forecast to 7.5%.

“India’s economy is poised to pick up in 2019, benefiting from lower oil prices and a slower pace of monetary tightening than previously expected, as inflation pressures ease," IMF said in its update to the bi-annual World Economic Outlook released on Monday.

In 2018-19, India is estimated to grow at 7.3%. The IMF has projected the economy will expand at 7.7% in 2020-21.

According to the IMF’s database, India’s contribution to world growth has risen from 7.6% during 2000-2008 to 14.5% in 2018.

Without naming India, IMF said in emerging market and developing economies, where inflation expectations are well anchored, monetary policy can provide support to domestic activity as needed.

With retail inflation at an 18-month low of 2.19% in December while services inflation remains elevated, many analysts now believe RBI may cut policy rates in its review meeting on 7 February. 

“We will take necessary steps to maintain financial stability and to facilitate enabling conditions for sustainable and robust growth,' Shaktikanta Das said in his first speech at the Vibrant Gujarat Summit on Friday after taking charge as the 25th RBI governor.

As of early January, crude oil prices stood at around $55 a barrel, and markets expected prices to remain broadly at that level over the next 4–5 years. Prices of metals and agricultural commodities have softened slightly since August, in part due to subdued demand from China.

IMF has projected average oil prices at just below $60 per barrel in 2019 and 2020 (down from about $69 and $66, respectively, in the last WEO). It has also revised price forecasts for most major agricultural commodities modestly downwards.