Chennai: The International Monetary Fund has raised India’s growth forecast by 20 basis points to 6.3 per cent FY24 and retained 6.3 per cent for FY25. IMF had predicted retail inflation to be at 5.5 per cent in FY24 before easing to 4.6 per cent in FY25.
“Growth in India is projected to remain strong, at 6.3 per cent in both 2023 (FY24) and 2024 (FY25), with an upward revision of 0.2 percentage point for 2023 (FY24), reflecting stronger-than-expected consumption during April-June,” said IMF in its World Economic Outlook.
In its July WEO, the IMF had projected a growth rate of 6.1 per cent for India for FY24, up 20 basis points from the April forecast on the back of strong domestic investment.
The World Bank too has predicted India’s FY24 growth to be 6.3 per cent, while the Asian Development Bank has projected 6.4 per cent for FY24 and 6.7 per cent for FY25. However, both the finance ministry and the Reserve Bank of India have retained their 6.5 per cent growth estimate for FY24.
IMF has retained its global growth forecast unchanged at 3 per cent for 2023 while paring down the 2024 projection by 10 basis points to 2.9 per cent.
IMF also has projected India’s consumer price-based inflation to be 5.5 in FY24 before easing to 4.6 per cent in FY25. India’s monetary policy projections are consistent with achieving the Reserve Bank of India’s inflation target over the medium term.
IMF finds that global price risks are exacerbated by the proliferation of food export restrictions. “Food security concerns prompted recent export restrictions in India, the world’s largest rice exporter. Risks to prices are tilted to the upside, stemming mostly from the ramifications of the end of the Black Sea Grain Initiative and uncertain effects of El Niño, possibly exacerbated by the proliferation of food export restrictions,” it said. However, global inflation may decline to 6.9 per cent in 2023 and 5.8 per cent in 2024.
The global lender also expects the country's current account deficit to remain at 1.8 per cent of GDP in FY24 and FY25. The IMF said that after the invasion Russian oil shipments rose to countries, including India. About 35 to 40 per cent of India’s crude oil imports came from Russia during April–June 2023, a stark rise from less than 5 per cent before the war in Ukraine. While India’s oil exports (mostly petroleum products) are small relative to its oil imports (mostly crude oil), India increased its oil exports to the European Union substantially, IMF said.
