Finance minister P Chidambaram on Saturday slammed the International Monetary Fund (IMF) at its annual meet in Washington for its pessimistic growth outlook for India.
While at it, the finance minister also criticized the slow pace of reforms in the governance of the fund, a longstanding demand of emerging economies such as India seeking a larger say.
In July, the IMF projected 5.6% growth for India for the year 2013, but drastically slashed it to 3.8% in its recent World Economic Outlook released last week.
“We do not share this pessimistic outlook,” the minister said at the plenary of the IMF Committee.
India hopes to post a growth rate of 5% or higher, based on expectations of a robust farm output and the impact of reforms initiated in the past year.
“I would like to ask, respectfully, what is the information that IMF has gathered between July and September, that we do not have that impelled the fund to drastically change the estimate?”
The projection, said the report, was based on expectations of “lackluster activity in manufacturing and services, and monetary tightening”, despite a “strong agricultural” output.
The report, which was released the day before Chidambaram arrived in Washington for the annual meetings of the World Bank Group including the IMF, had been bothering him, clearly.
He first took a shot at it in a speech at the Carnegie Endowment for International Peace on Thursday, saying India doesn’t share recent pessimism about the Indian economy.
He did not name the IMF then, but he did on Saturday.
And he demanded a review of the methodology used for these projections saying “in the past IMF projections have often been at divergence with final growth numbers”.
Conceding that India suffered a “significant downturn” in 2013, Chidambaram said India had taken step to spur growth, mainly to “ease supply constraints and improve the investment climate”.
On governance reforms, the minister sounded exasperated with the lack of progress: “Why does this problem remain with us in meeting after meeting?” he asked.
India and other emerging countries are seeking reforms in the governance of the fund to allow them more say, proportionate to their growing clout in global economy.