International Monetary Fund sees growth picking up in India

Delhi - Economy expected to rise to 7.5% this fiscal year

India's economic growth rate should pick up to 7.5 per cent in the 2016/17 fiscal year, the International Monetary Fund said on Wednesday, aided by a collapse in oil prices and relatively low exposure to current global financial turbulence.
Summing up its latest review of Asia's third-largest economy, the Fund forecasts that economic growth would pick up from 7.3 per cent in the 2015/16 fiscal year that ends on March 31.
"The broad message is that India's growth trajectory is pretty strong by international standard - not to mention the advanced economies," IMF Resident Representative Thomas Richardson told Reuters.
Inflation was behaving and was on track, the Fund said in a statement, with monetary conditions consistent with hitting the Reserve Bank of India's target for consumer price inflation of five per cent by March 2017.
And, while the balance of economic risks has improved, they remain tilted to the downside. These included the impact of intensified volatility on global financial markets, including from surprise unexpected US monetary policy moves or China's economic slowdown.
In comments published after Finance Minister Arun Jaitley unveiled an annual budget that stuck to deficit targets, the IMF called for more 'growth friendly' fiscal consolidation.
It also highlighted potential risks from weak corporate and bank balance sheets. Jaitley's budget on Monday committed $3.7 billion to recapitalise state banks. Bankers estimate that their recapitalisation needs are nearly 10 times as much.
Rate cut
The IMF just dumped cold water on those calling for a cut in Indian interest rates.
Prime Minister Narendra Modi's pledge this week to keep narrowing Asia's widest budget deficit - heeding a warning from central bank Governor Raghuram Rajan - prompted economists to forecast an imminent rate cut. Government officials also chimed in, saying the budget provided room to ease.
Yet the IMF has different advice for Rajan, a former chief economist at the multilateral lender: If anything, you might need to raise rates. 
 

• India