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IMF & World Bank Predicts 7.6% India Growth in 2016
Oct 19, 2016

The International Monetary Fund (IMF) and the World Bank predicted a robust 7.6 per cent growth for India in 2016. The Fund said India would remain the world’s fastest-growing large economy as it raised its growth forecast for the country by 0.2 percentage point from its earlier projections to 7.6 per cent for the current fiscal and the year after that. The country had also grown 7.6 per cent in 2015-16. 

  • The World Bank said India’s GDP could grow 7.6 per cent in 2016-17 and 7.7 per cent in 2017, supported by expectations of a rebound in agriculture, civil service pay reforms supporting consumption, increasingly positive contributions from exports and a recovery of private investment in the medium term. 
  • IMF said, India’s economy continued to recover strongly, benefiting from a large improvement in the terms of trade, effective policy actions, and stronger external buffers, which have helped boost sentiment.
  • Nevertheless, underlying inflationary pressures arising from bottlenecks in the food storage and distribution sector point to the need for further structural reforms to ensure that consumer price inflation remains within the target band over the medium term.
  • India still faces the challenge of further accelerating the responsiveness of poverty reduction to growth, promoting inclusion, and extending gains to a broader range of human development outcomes.
  • While keeping the global growth forecast unchanged at 3.1 per cent for 2016 and 3.8 per cent in the year after, IMF has trimmed its forecast for the US by 0.6 percentage point for 2016 and by 0.3 percentage point for 2017, projecting growth rates of 1.6 per cent and 2.2 per cent, respectively. 
  • The IMF said important policy actions toward the implementation of the goods and services tax have been taken, which will be positive for investment and growth.

However, what should worry India is the fact that the IMF has cut its global trade growth forecasts by 0.4 percentage point for 2016 and 0.1 percentage point (from its July forecast) for the year after that to 3.1 per cent and 3.4 per cent, respectively, and the downward revision of the economic growth projections for the US. India’s merchandise exports have already contracted for 20 of the past 21 months through August.


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