By IANS,
New Delhi : Leading think tanks, institutions and policymakers Thursday came out with their own projections of India’s growth rate but with one common thread – the country’s economic expansion will be sharply lower than 9.1 percent logged last fiscal.
The gloomiest picture yet was painted by the International Monetary Fund (IMF), which pegged the growth of India’s gross domestic product (GDP) at 5.1 percent. But Commerce Minister Kamal Nath exuded confidence that the economy will expand by 7-8 percent.
The Economist Intelligence Unit (EIU), a think tank of the leading publication, was moderate in its assessment and said the Indian economy will grow by 5.6 percent this fiscal, in line with a similar downturn expected in another major developing country – China.
“We now expect the global economy to come to a virtual halt,” said IMF chief economist Olivier Blanchard as IMF Wednesday released an update to its World Economic Outlook together with an update to its Global Financial Stability Report.
Though more resilient than in previous global downturns, emerging and developing economies will also suffer serious setbacks. For example, growth is expected to slow to 6.75 percent in China and 5.1 percent in India, it said.
While growth projections for India for 2009 have been lowered by 1.2 percentage points than predicted last November, its growth rate is still expected to go up to 6.5 percent in 2010, only .03 points lower than that forecast earlier.
The fresh projections came barely two days after India’s own central bank lowered its growth forecast for the current fiscal to 7 percent from 7.5-8 percent earlier, even as senior ministers were optimistic that the economy will maintain its momentum.
“India’s path to recovery will be faster than that of the rest of the world,” Kamal Nath told the annual meeting of the World Economic Forum at Davos in Switzerland, to which he is leading a 75-member Indian delegation.
“For example, after industrial downturn in October 2008, the November figure was positive at 2.4 percent. The financial situation has eased somewhat and liquidity is accessible in the domestic markets,” the minister said while articulating his confidence.
External Affairs Minister Pranab Mukherjee, who has temporary charge of the finance ministry, also maintained Thursday that the Indian economy will grow by 7 percent this fiscal.
But EIU said even though India had performed well in the past and was better placed at present, when compared with other economies, the circumstances in the global economy had changed.
“Emerging markets like India have had a good run in recent years on the back of buoyant world trade growth and abundant global liquidity, which in turn drove strong domestic demand expansion,” said Manoj Vohra, director of research at EIU.
“However, the environment changed dramatically in the second half of 2008 and will deteriorate further in 2009,” he added.
“We expect India’s GDP (gross domestic product) to grow by only 5.6 percent in 2008-09, compared to 9 percent last year. India is not alone, China too appears to be heading for a sharp slowdown.”