‘India expected to grow at 7.4% in 2018’

‘India expected to grow at 7.4% in 2018’

What has happened?

India is expected to grow at 7.4% in 2018 and 7.8% in 2019, leaving its nearest rival China behind respectively at 6.6% and 6.4% in the two years, the IMF said on Tuesday.

World Economic Outlook report by IMF

• IMF foresees China to trail behind at 6.6%; reforms such as GST to help reduce internal trade barriers
• With the short-term firming of growth driven by a recovery from the transitory effects of the currency exchange initiative and implementation of the national goods and services tax, and supported by strong private consumption growth
• India has made progress on structural reforms in the recent past, including through the implementation of the GST, which will help reduce internal barriers to trade, increase efficiency and improve tax compliance.

Key challenge

• While the medium-term growth outlook for India is strong, an important challenge is to enhance inclusiveness
• India’s high public debt and recent failure to achieve the budget’s deficit target, calls for continued fiscal consolidation into the medium term to further strengthen fiscal policy credibility