India to surpass China’s economic growth rate in 2016: IMF

 Sai Nikesh D | The Dollar Business Terming the newly formed Indian government- National Democratic Alliance’s (NDA) reforms as promising, the IMF report said that India’s growth rate is expected to grow at 6.3 per cent in 2015 and 6.5 per cent in 2016. With this increasing growth rate, India will likely cross China’s projected growth rate in 2016, the report said, insisting on the implementation of reforms as a key factor. “I think the reform plans of the new Prime Minister of India are promising. We are going to have to see the speed of the implementation,” said Gian Maria Milesi-Ferretti, Deputy Director, in IMF’s Research Department, according to the sources. Responding to a question, the IMF official had also said that the effect of Prime Minister Narendra Modi-led government’s economic reform would be difficult to predict as these are structural reforms and are growing gradually over the medium term.”Key is going to be implementation,” Milesi-Ferretti added, say the sources. In 2014, India’s growth rate was 5.8 per cent against China’s 7.4 per cent, said the World Economic Report update released by the International Monetary Fund. According to the World Economic Outlook Projection Report released on January 20, 2015, China’s percentage of projection (6.8%) year over year is more than that of India’s (6.3%) in 2015. Whereas coming to 2016, India’s year over year percentage of projection (6.5%) is surpassing that of Chinas percentage (6.3%), which is equal to India’s year over year percentage of projection in 2015. While China’s year over year percentage of projection has come down in 2015 from 7.4% in 2014, India’s recorded a rise from 5.8% to 6.3%. Coming to the estimates of fourth quarter, the estimated percentage of China is 7.4% in 2014 and the projections are 6.7% in 2015 and 6.3% in 2016. Whereas, the estimated percentage of India is 5.6 % in 2014 and the projections are 6.5% in 2015 and 6.6% in 2016. Among the world markets, the statistics in the report suggest that the emerging markets of Asia stand top in the growth rate and however, India stood ahead of China. According to the latest IMF report, in India, the growth forecast is broadly unchanged; however, the weaker external demand is offset by the boost to the terms of trade from lower oil prices and a pickup in industrial and investment activity after policy reforms. Structural reforms and the decisions over revival of economy would likely boost India’s Gross Domestic Product in 2015. Also, 2015 is expected to witness FDI inflows in a larger scale. According to Timothy Moe, chief Asia-Pacific strategist, Modi’s foreign trips are expected to bring huge FDI inflows into India, close to around $36 billion in 2015.    

This article was published on January 20, 2015.