The series of recent steps taken by New Delhi, including putting pending projects on fast track, liberalising foreign direct investment, and fiscal consolidation, will help India realise its potential growth rate.
“Overall, there has been reform in accelerating policy approvals, project approvals, liberalising FDI, and continuing with the commitment for fiscal consolidation.
“The Government is acting on a number of areas. That is why we do believe that the potential growth in India could certainly go above where it currently has been,” Anoop Singh, Director of the Asia and Pacific Department, International Monetary Fund, said.
From over 9 per cent GDP growth for many years prior to the 2008 crisis, the economy grew 6.5 per cent in 2011-12. GDP growth figure for FY’13 is expected to be at a decade low of around 5 per cent due to global slowdown.
Responding to reporters’ questions at a news conference, Singh said the IMF believes that India has the potential of a higher growth rate than it is now.
Growth recovery
“We have seen, however, a drop in growth in recent years, but we are seeing in recent months a changing sentiment responding to changing policies,” he said.
“If you look at some high frequency indicators, you will see that a recovery from the low growth in India is beginning.
“As you know, we are projecting for this fiscal year growth rising to about 5.8 (per cent). If you look at the calendar year for 2014, we are seeing it already rising to over 6, around 6 per cent,” Singh said at the IMF news conference on Friday.
“On policies, one concern has been the slow rate of project approvals in India. Therefore, I think it is significant that the Government has established a Cabinet Committee to accelerate project approvals and deal with this overhang of project requests that have not been approved,” he said.