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India only major global economy set for double-digit growth in 2021: IMF

Dubai - Growth to outperform other Asian countries on back of substantial monetary and fiscal stimulus.

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India will be the only major economy in the world on track to record a double-digit growth of 11.5 per cent in 2021, far outstripping China’s projected growth of 8.1 per cent, the International Monetary Fund said.

In its latest update, the IMF also revised its estimates for all major global economies in 2020, and said that the Indian economy would have contracted by 8.0 per cent last year. China is the only major country which registered a positive growth rate of 2.3 per cent in 2020.

Other major economies that will show strong rebound in 2021 include Spain (5.9 per cent) and France (5.5 per cent).

The IMF’s bullish outlook for Asia’s third largest economic power, and the world’s sixth biggest, comes a week ahead of the Indian budget for fiscal 2021-22 to be unveiled by Finance Minister Nirmala Sitharaman on February 1.

The Finance Ministry had also exuded confidence that India would recover at a fast pace and reach pre-Covid levels by the end of this fiscal unless a second wave of cases was triggered by a fatigue with social distancing.

In 2022, India’s economy is projected to grow by 6.8 per cent and that of China by 5.6 per cent.

The IMF Managing Director Kristalina Georgieva said in a statement early this month that India actually has taken “very decisive action, very decisive steps” to deal with the pandemic and to deal with the economic consequences of it.

“What we see is that transition, combined with policy support, seems to have worked well. Why? Because if you look at mobility indicators, we are almost where we were before Covid in India, meaning that economic activities have been revitalized quite significantly,” the IMF chief said.

Georgieva said emerging markets on average have provided six per cent of GDP. In India this is slightly above that. “Good for India is that there is still space to do more,” she said, adding that she is impressed by the appetite for structural reforms that India is retaining.

Despite being one of the larger economies severely ravaged by the pandemic, India has navigated the challenges successfully, and with the roll-out of the Covid-19 vaccine. Economists and analysts are unanimous in their assessment of the impending growth phase of the second largest populous country on the back of a spate of stimulus measures and reforms.

Noted economist and former RBI Governor Raghuram Rajan has been realistic in observing that the economy would not get back to pre-Covid levels before late 2022 even as New Delhi believes that India is on course for a V-shaped recovery.

However, Rajan believes that India would see a strong wave of growth. Any country has to grow after being down 25 per cent of GDP. “We will see a rebound. The question is, what are we doing to make up the lost ground? The World Bank estimates that we would have lost $900 billion by the time this (pandemic) is over."

Economists at Nomura believe that India’s growth is going to outperform other countries in Asia this year on the back of substantial monetary and fiscal stimulus and an effective virus containment drive. “So in calendar year 2021, we are expecting close to 12.8 per cent growth which is partly base effects driven but from a fundamental standpoint, is a fairly solid growth number.”

issacjohn@khaleejtimes.com

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