IMF downgrades India GDP growth to 7 per cent

Citing muted domestic demand, the International Monetary Fund (IMF) has lowered the GDP growth target of India from the earlier 7.3 per cent to 7 per cent for FY20 and 7.2 per cent for the following year, on Tuesday, in its July edition of World Economic Outlook. While it cut down its projection for global growth to 3.2 per cent in 2019 and 3.5 per cent in 2020.

The IMF has downgraded the growth forecast across the board for the major economies, though for varied reason for 2019.

In the January-March quarter, India's GDP growth declined significantly at 5.8 per cent as against 6.6 per cent in the preceding quarter. According to the latest Economic Survey, the India’s GDP is likely to grow at 7 per cent for FY20E. The survey also mentioned that the country’s GDP growth for the last five years was around 7.5 per cent.

To achieve the target of US$5 trillion economy size in the next five fiscals, India requires to grow its economy by almost 8 per cent. The slowdown in the sectors like Auto (~7.1 per cent of GDP), consumption along with liquidity crunch is weighing heavily on the Indian economy.