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IMF predicts 7.5 per cent growth rate for India in 2016

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Washington: The International Monetary Fund (IMF) has predicted that India’s growth is expected to strengthen from 7.3 per cent this year and last year to 7.5 per cent next year.

“Growth will benefit from recent policy reforms, a consequent pickup in investment, and lower commodity prices,” the IMF said in latest World Economic Outlook (WEO) released on Tuesday ahead of the World Bank-IMF annual meetings in Lima (Peru).

The WEO foresees lower global growth rate compared to last year, with modest pickup in advanced economies and a slowing in emerging markets, primarily reflecting weakness in some large emerging economies and oil exporting countries.

Global real GDP grew at 3.4 per cent last year, and is forecast to grow at only 3.1 per cent this year. Growth is expected to rebound to 3.6 per cent next year and increase beyond 2016.

One of the key factors in this is the gradual increase in the global weight of fast-growing countries such as China and India, which further increases their importance as drivers of global growth, the WEO said.

In India, near-term growth prospects remain favorable, and the decrease in the current account deficit has lowered external vulnerabilities, it said.

Inflation is expected to decline further in 2015, reflecting the fall in global oil and agricultural commodity prices.

The faster-than expected decline in inflation has created space for considering modest cuts in the nominal policy rate, IMF said.

But the real policy rate needs to remain tight for inflation to decline to the inflation target in the medium term, given upside risks to inflation, it said.

Continued fiscal consolidation is also essential, but it should be more growth friendly, WEO said suggesting tax reform and reduction in subsidies.

With balance sheet strains in the corporate and banking sectors, financial sector regulation should be enhanced, provisioning increased, and debt recovery strengthened, it suggested.

Structural reforms should focus on relaxing long-standing supply constraints in the energy, mining, and power sectors, WEO said.

Priorities include market-based pricing of natural resources to boost investment, addressing delays in the implementation of infrastructure projects, and improving policy frameworks in the power and mining sectors.

In advanced economies, growth is expected to remain robust and above trend through 2016 and contribute to narrowing the output gap.

The growth recovery in the euro area is projected to be broad-based. Growth prospects in emerging markets and developing economies vary across countries and regions.

But the outlook in 2015 is generally weakening, with growth for these economies as a group projected to decline from 4.6 per cent in 2014 to 4 per cent in 2015.

The WEO underscores that raising actual and potential output must remain the policy priority. This will require a combination of demand support and structural reforms, it said.

(Arun Kumar, IANS)

Next Story

Facebook Announces an Investment in Indian Startup Meesho

Facebook has come to discover that the startup phenomenon is rapidly expanding to smaller cities

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FILE - The logo for Facebook appears on screens at the Nasdaq MarketSite, in New York's Times Square, March 29, 2018. VOA

In its first-ever equity investment in an Indian start-up, Facebook on Thursday announced an investment in Meesho, a platform that enables Indian entrepreneurs to establish online businesses via social channels.

Although the social networking giant did not disclose the amount, the move by Facebook is seen as a commitment to the country’s vibrant Internet ecosystem.

“We are excited about India and its rapidly rising Internet ecosystem. With this investment in Meesho, we want to fuel a business model that can result in rapid job creation and the rise of a female entrepreneurial class in India,” Ajit Mohan, Vice President and Managing Director, Facebook India said in a statement.

Facebook in 2017 introduced a programme for women-founded companies — SheLeads Tech — to support them with access to community, tools, mentorship and resources to succeed in building a business in technology.

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FILE – The Facebook logo is seen on a shop window in Malaga, Spain, June 4, 2018. (VOA)

“We love that the company is translating the power of online communities to expand economic opportunity for all of India, and especially women,” Mohan added.

Qccording to Vidit Aatrey, Co- Founder, Meesho, the company has grown from its humble beginnings at IIT to 15,000 suppliers and 2,000,000 resellers throughout India in just four years.

Also Read- Microsoft Brings AI-enabled Digital Labs in Indian Colleges

“We share a common goal with Facebook – to enable community and help small businesses grow. This commitment from Facebook will help us leapfrog towards our goal,” said Aatrey.

India is the third largest startup market globally and with its startup initiatives like SheLeads Tech, Code for the Next Billion, India Innovation Hub and more, Facebook has come to discover that the startup phenomenon is rapidly expanding to smaller cities. (IANS)