The International Monetary Fund (IMF) has projected Indian economic growth at 6.3% this year and 6.5% in 2016. Terming the new government's reforms as 'promising, the IMF, in its latest report namely ‘World Economic Report update’ has highlighted that Indian economic growth at 6.5% in 2016 will surpass China's projected growth rate of 6.3%. However, it cautioned that implementation of reform is key to boost the economic growth.
Further, it noted that lower oil prices and a pickup in industrial and investment activity after policy reforms are likely to provide impetus to economic growth. After registering an average growth rate of 8% during FY08-FY12, Indian economic growth had slowed down to below 5% over the last two financial years. The factors like high interest rate and stubborn inflation, low investments and slow execution of infrastructure projects have impacted country’s economy growth. However, the domestic economy has shown signs of nascent recovery and expanded at 5.5% during first half of this fiscal as compared to 4.9% in the same period of previous fiscal.
On global front, IMF lowered its growth forecast by 0.3 percentage points to 3.5% for 2015 and 3.7% for 2016 and urged all governments and central banks to pursue accommodative monetary policies and structural reforms for supporting growth. It advised advanced economies to maintain accommodative monetary policies to avoid increases in real interest rates as cheaper oil increases the risk of deflation.