The International Monetary Fund (IMF) has slashed
India’s growth forecast to 4.9 per cent for 2012 due to low business
confidence and “sluggish structural reforms.”
The IMF
had in July projected a growth rate of 6.1 per cent for the current
year. During the first quarter ended June 2012, Indian economy expanded
by 5.5 per cent.
“India’s activity suffered from
waning business confidence amid slow approvals for new projects,
sluggish structural reforms, policy rate hikes designed to rein in
inflation, and flagging external demand,” IMF said in the World Economic
Outlook (WEO) released in Tokyo ahead of the IMF-World Bank 2012 Annual
Meetings.
In India, the report said, “growth
weakened more than expected in the first half of 2012, an outcome of
stalled investment caused by governance issues and red tape, and a
deterioration in business sentiment against the backdrop of a rising
current account deficit and the recent rupee depreciation.”
Compared
with the region’s growth performance in recent years, the near— and
medium—term outlooks are less buoyant, the report said.
The report has projected 6 per cent growth for the next year (2013), compared to an earlier 6.5 per cent projection.
For
2012—13 fiscal, the IMF said that growth is projected to average 5—6
per cent in 2012—13, more than one percentage point lower than in the
April 2012 WEO.
“The downgrade reflects both an
expectation that current drags on business sentiment and investment will
persist and a weaker external environment,” the report said.
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