IMF lowered India’s growth forecast to 4.9% in 2012

                  

                  India’s growth path has received another painful blow. And this time it is from the International Monetary Fund (IMF) itself. IMF has recently lowered India’s GDP expansion to 4.9% for the year of 2012. India’s gross domestic product expansion never went to below 5% in the last decade, so for the first time in mere 10 years it will drop below 5% mark, which is a major setback for the Indian economy.

                      Indian government is working hard on economic reforms; they have cut subsidies in some of the areas. They also issued some strict orders. They have hiked the price of some essential materials like petrol and diesel. Now time will tell whether these moves can be able to bring back the lost glory or not.

                      In its World Economic Outlook the IMF said, “India’s activity suffered from waning business confidence amid slow approvals for new projects, sluggish structural reforms, policy rate hikes designed to rein in inflation, and flagging external demand.”

                       Are these new economic reform measures too little too late?  Time will answer this question, but the fact is time was not good across the world too. All major countries are suffering from this fall back in matter of growth, including US, UK, and even China. China’s growth was trimmed to 7.8% for the year 2012.

                        But India’s performance is the worst among the major economies. India’s 1.3% downward revisions from the July forecast of 6.2% are horrible. It is also the first time India’s GDP growth will drop below 5% after 2002. In the year 2002 India’s growth plunged to 4.3% as a after effect of 9/11 attack.

                        There is a ray of hope too, as IMF welcomed gracious the new economic measures of Indian government. While describing it IMF said, “There is an urgent need to re accelerate infrastructure investment, especially in the energy sector, and to launch a new set of structural reforms, with a view to boosting business investment and removing supply bottlenecks.”