IMF revises down India's GDP forecast again

[kawaraj]

The Indian economy would grow by 7.8% in 2011 and by an even slower 7.5% next year, the International Monetary Fund (IMF) said on Thursday, citing less-than-anticipated recovery in advanced economies and the uncertain global outlook. "In India, where corporate funding relies increasingly on external commercial borrowing and equity finance, a severe fall in investment would severely curtail growth," the IMF said in its latest regional economic outlook.
The Indian economy grew by 8.5% in 2010-11 but moderated to 7.7% during April-June, the slowest in 18 months, mirroring signs of a slowdown.
Private consumption remained robust in India due to rising disposable income, but investment was subdued partly on concerns over governance and the global outlook, it said.

that's assume GOI has not fake any numbers...

IMF revises down India's GDP forecast to 7.5% for '12 - Hindustan Times

 

[Chinese-Dragon]

The GDP numbers from India are certainly slowing down, quarter after quarter.

They are still waiting for the "Chinese bubble" to pop, and win the growth race by default.

 

[fallstuff]

There are so many areas that needs improvements, how can the growth go down that much ? How much the reates went up ?

 

[Chinese-Dragon]

There are so many areas that needs improvements, how can the growth go down that much ? How much the reates went up ?

The question is whether or not India is even capable of sustaining double-digit growth rates in the first place.

The infrastructure investment has come too late.

 

[karan.1970]

^ Too late for what ??

 

[Chinese-Dragon]

^ Too late for what ??

Infrastructure is a long-term investment. You should have made those infrastructure investments a decade ago, if you wanted to sustain double-digit growth rates today.

 

[karan.1970]

Infrastructure is a long-term investment. You should have made those infrastructure investments a decade ago, if you wanted to sustain double-digit growth rates today.

So what you are saying is that if India continues making the right investments now (that started late) it should be able to meet double digit growth rates a decade down the line ?

 

[Chinese-Dragon]

So what you are saying is that if India continues making the right investments now (that started late) it should be able to meet double digit growth rates a decade down the line ?

I can't predict the future, I am just looking for reasons why India's growth rate is currently falling.

Tell me, are you happy with the infrastructure investments that the Congress party has provided for India in the past decade?

 

[karan.1970]

Tell me, are you happy with the infrastructure investments that the Congress party has provided for India in the past decade?

In one word.. No...

But apart from infrastructure, there are more global reasons for the fall in the projection from 7.8 to 7.5.. The same reasons that got IMF to revise China's growth projections from 9.5 to 9.0

 

[lepziboy]

Chinese-Dragon is right it came on the wrong time.especially when the world economy is slowing down.India can`t lift everything even china is having an hard time.If indian babus followed chinese style growth then I could say that there would be a chance

 

[Vibs]

I can't predict the future, I am just looking for reasons why India's growth rate is currently falling.

Tell me, are you happy with the infrastructure investments that the Congress party has provided for India in the past decade?

Reason is very simple. The current government has let inflation skyrocket leading to the Reserve Bank to launch drastic measures to rein it in. These measures have made borrowing more expensive for the industry leading to slowdown in newer investments and industrial growth as a whole. The weakening rupee does not help (This is where China holds an advantage given their control of Yuan rates). IMF predictions were based on their forecast of Indian growth, inflation and predictions of potential measures by the central bank. Given the drastic steps taken by the RBI head (the level of change of Base point that actually occurred was not even considered by the IMF analysts). They had to take a couple of steps back and rework their analysis.
India is still growing strong but I suspect that the margin of error of the IMF analysis was very big and they are revising their initial estimate in installments to escape the embarrassment of their failure to predict a particular economy.

 

[jdme]

Infrastructure is a long-term investment. You should have made those infrastructure investments a decade ago, if you wanted to sustain double-digit growth rates today.

I concur. After 10 years of double digit growth, how would India "sustain" that rate...

---------- Post added at 04:55 AM ---------- Previous post was at 04:54 AM ----------

In one word.. No...

But apart from infrastructure, there are more global reasons for the fall in the projection from 7.8 to 7.5.. The same reasons that got IMF to revise China's growth projections from 9.5 to 9.0

IMF has specifically mentioned slowdown in global economy as reason for reduction in rate.

---------- Post added at 04:57 AM ---------- Previous post was at 04:55 AM ----------

Tell me, are you happy with the infrastructure investments that the Congress party has provided for India in the past decade?

Unlike China, in India government doesn't "invest" in physical infrastructure. It passes policies. All infrastructure projects in India are funded by private corporations with some aid from government.

 

[Abingdonboy]

Infrastructure is a long-term investment. You should have made those infrastructure investments a decade ago, if you wanted to sustain double-digit growth rates today.

Absolute nonsense. India's rapid economic growth only just gained momentum starting from this decade. Before then India was utterly broke and couldn't afford huge long term infrastructure investment. The Indian growth story is relatively new compared to China because of socialism and "licence raj" and given the state of the world economic status we would expect such fluctuations. However it is important to see that private consumption remanied steady- this is the real story of India's growth, empowering her people instead of China's that is dependant on enslaving them. The Chinese bubble WILL burst one way or another- this has been predicted time and time again but with 60,000,000+ entering the Indian middle class a year and the significant mulitplier affect present in the Indian economy, the true Indian economic miracle is yet to occur. MMS has given India the starting point, the rest is in the hands of India.

 

[jdme]

^^Don't hold your breath on Chinese "bubble" bursting. 3.6 trillion reserve is not sitting there for fun. Be more concerned about India. It's supply lines are completely clogged. And now Congress have given up all pretense of development and it is now pandering to "poor" for coming election. MMS has basically put brakes on 7 years of momentum.

 

[jdme]

IMF endorses RBI's monetary tightening policy

Ahead of the credit policy review meeting of the Reserve Bank later this month, the International Monetary Fund (IMF) has supported the RBI's monetary tightening strategy for taming inflation.

"In economies where such overheating pressures remain high, inflation remains above target and inflation expectations have continued to rise, such as in China, India, and Korea, the current pace of monetary tightening remains appropriate," the IMF said in its Regional Economic Outlook for the Asia-Pacific.

The RBI has already hiked interest rates 12 times since March, 2010, to control inflation, which is currently hovering near the double-digit mark.

With the rise in key interest rates by 350 basis points over the past 20 months resulting in a slowdown in industrial output, there has been a widespread demand for a pause in the rate hikes. The RBI is slated to conduct its second quarter policy review on October 25.