The IMF raised India's growth forecast from 6.5% in April to 7% in its latest report, despite the energy shock from the Iran war. Krishna Srinivasan, director of the IMF's Asia and Pacific Department, said first-quarter growth in this fiscal year came in much stronger than expected, and that India entered the shock with strong fundamentals, fiscal prudence and large reserves. He argued the exchange rate is not a barometer of economic success, but a buffer against shocks, even though the rupee is under pressure and investment inflows have weakened. He also welcomed the Ministry of Statistics and Programme Implementation's (MoSPI) GDP methodology revision, which rebased the series and used the PPI and IIP to revise the production side. He spoke at a news conference in Bangkok, where the IMF is holding its annual meeting.
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Original headline: India responded well to energy shock , has strong fundamentals : IMF official on 7 pc growth projection
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- India responded well to energy shock , has strong fundamentals : IMF official on 7 pc growth projection
The IMF raised its growth forecast for India from 6.5% in April to 7% in its latest report, despite the energy shock from the Iran war. Krishna Srinivasan, director of the IMF's Asia and Pacific Department, said the upgrade reflects first-quarter growth that came in stronger than expected, along with India's strong fundamentals, fiscal prudence and large reserves. He said the rupee's weakness, amid weaker investment inflows and higher oil price risks, reflects global interest rates, investor risk appetite and oil prices, and that as an oil importer India has been affected by the energy shock. He argued the exchange rate should not be seen as a barometer of economic success or failure, and welcomed the Ministry of Statistics and Programme Implementation's GDP methodology revision, which rebased the series and used the PPI and IIP to revise the production side.
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Kyunghoon Kim of the Korea Institute for International Economic Policy (KIEP) says India must strengthen policy credibility and continuity to keep attracting foreign direct investment, since strong growth alone may not reassure global investors. He praises India's investment, trade and industrial policies, citing production-linked incentives and the India Semiconductor Mission, and notes first-quarter GDP growth of 7.8% supported by investment, consumption and exports. Kim highlights foreign exchange reserves of around USD 730 billion and says free trade agreements with the UK and EU could help over the medium term. He warns that growth does not automatically create enough jobs or higher incomes, and questions whether India has enough skilled workers. He also flags inflation rising to 5.5% in September, alongside a 25-basis-point rate increase to 5.5%, the first in nearly four years.
- Foreign investment needs policy credibility beyond India strong GDP growth
Kyunghoon Kim, Head of the India and South Asia Team at the Korea Institute for International Economic Policy (KIEP), said India must maintain policy credibility and continuity to sustain FDI, as strong growth alone may not reassure investors. He praised India’s investment, trade and industrial policies for attracting FDI, citing first-quarter GDP growth of 7.8 per cent, services growth above 12 per cent, manufacturing growth above 9 per cent and foreign exchange reserves of around USD 730 billion. He cautioned that growth does not automatically create enough jobs, and that India needs enough skilled workers, while inflation rose from around zero per cent in October last year to 5.5 per cent in September this year. The central bank raised its policy rate by 25 basis points to 5.5 per cent, its first increase in nearly four years. Kim said India could grow around 7 per cent over the medium term and become the world’s third-largest economy by 2031 or 2032.
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