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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

Samsung Display Plans To Invest $500mn in India To Set Up Manufacturing Unit

In India, Samsung Electronics has been in a fierce competition with Chinese rivals

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Samsung Display
Industry insiders said new Samsung Display plant would help its parent company secure smartphone display panels at cheap prices and boost productivity. Pixabay

Samsung Display, South Korea’s major display panel maker and an affiliate of Samsung Electronics, plans to invest $500 million in India to set up a manufacturing unit.

According to US tech media outlet TechCrunch, Samsung Display filed an investment plan with India’s regulator earlier this month, saying the plant in Noida, near New Delhi, would produce smartphone displays

Samsung Display officials in South Korea confirmed that the company was preparing to set up a plant there, but declined to comment on the scale of investment, Yonhap news agency reported on Monday.

Last year, the company set up its India arm Samsung Display Noida Private Ltd.

In 2018, Samsung Electronics opened a smartphone manufacturing plant in Noida to expand presence in the world’s second-largest mobile phone market, after China.

Samsung
Samsung Display, South Korea’s major display panel maker and an affiliate of Samsung Electronics, plans to invest $500 million in India to set up a manufacturing unit. Wikimedia Commons

Industry insiders said Samsung Displays’ new plant would help its parent company secure smartphone display panels at cheap prices and boost productivity.

ALSO READ: Video Games May Have Positive Impact on Kids: 71% Parents

In India, Samsung Electronics has been in a fierce competition with Chinese rivals. According to data from market researcher Counterpoint, Samsung Electronics is the second-largest smartphone vendor behind China’s Xiaomi Corp in India. (IANS)