The International Monetary Fund (IMF) on Wednesday painted a gloomy picture of the economy, projects India's growth to moderate to 6.25 per cent in 2008-09 and further to 5.25 percent in 2009-10.
“After five years with average growth of 8.75 per cent, India's economy is slowing," the IMF said in a background paper on the IMF Executive Directors' assessment after the annual consultation with New Delhi. According to official data released by the government last month the country’s gross domestic product (GDP) grew at slower 5.3 per cent during the quarter ending December 2008.
The latest official data could mean that the country’s economy is most likely be much lower the government’s estimates for 7.1 per cent growth this year.
The IMF projections for this year 2008-09 is significantly lower than the government’s estimates of 7.1 per cent growth this year.
“Corporate investment — the major growth driver during recent years — is expected to slow because of weakening profitability and confidence, and tightening of financing conditions from foreign and non-bank sources.”
“Policy measures to stimulate the economy and a good harvest should support domestic demand,” IMF said.