The World Economic Outlook, released by International Monetary Fund (IMF) this week in Bali, has India smiling even though most Indians might not be in a mood to share this enthusiasm. The annual report has forecast a growth rate of 7.3 per cent for India this fiscal and slightly higher growth –7.4 per cent – for financial year 2019. This is laudable, more so when noting the projections for the US and China. The report says growth for China is down from 6.9 per cent last year to 6.6 per cent this fiscal and could go further down to 6.2 per cent in 2019. As for the US, the growth rate for this fiscal is placed at 2.9 per cent and for the next fiscal 2.5 per cent. Overall, the Asian region ably backed by India and China remains as the centre of global economic growth in the first quarter of the present century, edging past heavyweights Europe and the US.
The Indian growth story has been impressive since the 1990s, after a period of chaos, though neighbouring China registered a much faster growth. At the same time, China is in for shocks following the new round of imposition of trade tariffs on Chinese imports by the Trump administration. Hope is that India would further hasten its growth rate, and more importantly make sure that the suffering multitudes across the country, a billion or more, are uplifted from poverty and deprivation sooner than later. They have little to feel happy about, as joblessness is at its peak and farm distress and financial worries are leading to suicides. The child mortality rate is worse than that of Africa and health care remains highly expensive for the common folks.
The good tidings are there for all to see, as well. The IMF report has praised India for the reforms that it has been undertaking in recent years, including the rollout of the Goods and Services Tax. Yet, a close look at the markets show tax evasion is still high and receipts are hard to come by for purchases made thereby defeating the very purpose of the reform. Another area of concern is the inflationary trends. The IMF report notes that inflation is on the rise, of the order of 3.6 % this past fiscal and heading to 4.7 % the present fiscal. The steady rise in fuel prices might add to this problem, and the Modi government can ill afford having such shocks in the run-up to Parliamentary polls.