The IMF are forecasting 5.6 per cent growth for the Indian economy next year, a number which, in comparison with the OECD group, looks healthy enough, but one which will surely dissapoint in comparison with the numbers being generated by that 'other' Asian economy: China. There is much that could be said about this, suffice it to say there is sufficient debate about the validity of the respective numbers to lead the prudent person not to want to get too excited about this 'growth differential' at this stage. Not that this is an argument for complacency, far from it, it is one for reform and more endeavour.
Projecting a 5.6 per cent economic growth for India in 2003, the International Monetary Fund today said the GDP growth would go up to 5.9 per cent in 2004, but the targeted 8.0 per cent will remain elusive without reforms and check on fiscal deficit. India is expected to register 'strong' growth at 5.6 per cent in 2003 and 5.9 per cent next year in the face good monsoon, IMF Research Department director Kenneth Rogoff said releasing the latest 'World Economic Outlook' in Dubai. Referring to the report, he said that rising public debt and fiscal deficit were a matter of concern. Rogoff, however, said China would grow faster at 7.5 per cent in 2003 and 2004, as against less than 6.0 per cent growth in India. "In India, while growth is expected to pick up later this year on the back of a recovery in the agricultural sector following last year's drought, the expansion remains well below the 8 per cent rate targeted by the authorities, undermining official goals for reducing poverty and regional disparities," the report said. A key issue which remained for India was the slow pace of fiscal and structural reforms, it said. "With the general government deficit set to reach about 10 per cent of the GDP for a fifth year, and debt plus recorded contingent liabilities nearing 100 per cent of GDP, fiscal policy is clearly on an unsustainable path," IMF noted. It regretted the 'absence of consolidation efforts in this year's budget and delay in introducing value-added tax.'