Indian economy clearly world's fastest growing, accord 3 international organizations

Three international organizations have endorsed India's growth story recognizing it as the world's fastest growing major economy for this and the next three years and in two reports raised some of their earlier projections. On Monday, the International Monetary Fund's (IMF) report released in Davos estimated India's gross domestic product growth rate for this fiscal year at 7.3 percent, while the UN's report in New York pegged it slighly higher at 7.4 percent.

From their previous projections, the IMF raised the growth forecast for 2019-20 by 0.1 percent to 7.5 percent and the UN upped the estimate for the current fiscal year by 0.2 percent and also for the next fiscal year by 0.2 percent to 7.6 percent. The World Bank last week earlier this month concurred with the IMF, putting this fiscal year's growth rate at 7.3 percent.

On the Indian side, the Central Statistics Office (CSO) put the current fiscal year's growth at 7.2 percent and the Reserve Bank at 7.4 percent. For 2020-21, the IMF forecast India's growth rate at 7.7, the UN at 7.4 and the WB at 7.5 percent. In contrast for the world as a whole, the three organizations painted a less optimistic picture. Gita Gopinath, presenting her first outlook report as IMF's chief economist, said in Davos, "The global expansion is weakening and at a rate that is somewhat faster than expected."

The IMF's World Economic Outlook estimated the global growth for last year to be 3.7 percent and forecast it to go down to 3.5 percent this year and go up to 3.6 next year. The UN's World Economic Situation and Prospects 2019 estimated the global economy to have expanded by 3.1 percent last year and forecast it to slow to 3 percent for this year and the next.

The World Bank's Global Economic Prospects estimated last year's growth at 3 percent and forecast it to dip to 2.9 percent this year and to 2.8 percent in the next two years. The UN's report said, "Economic growth continues to be underpinned by robust private consumption, a more expansionary fiscal stance and benefits from previous reforms. But it added, "Yet, a more robust and sustained recovery of private investment remains a crucial challenge to uplifting medium-term growth." It expressed some concern over the size of the fiscal deficit in India, and said medium-term consolidation plans have to be undertaken.

"In India the size and composition of public budgets have been important in promoting growth, prioritizing public investments in infrastructure, subsidies and welfare payments, and the rural economy," the report pointed out. "This will prevent any reduction of the fiscal deficit in the near term." All three said that China's economy was slowing down, even though its growth rate is nearly double the global rate. The IMF and the UN estimated China's growth last year at 6.6 percent. While the IMF forecast it go down to 6.2 per cent this year, the UN gave the figure of 6.3 percent. The World Bank estimate for the East Asian giant's growth rate was 6.5 percent for 2018 and 6.2 this year.

(With inputs from agencies.)